The best time to put on a new employee

We often get asked, “When is the best time to put on a new employee?”

Our response is, “In anticipation of growth, not in response to growth.”

You see, unless you get in front of the curve, you’ll always feel like you are playing catch up.

Here are the Top 5 Factors to consider before putting on a new employee.

1. The likelihood of continued growth.

   If you have a seasonal business, when will the next busy season kick in? If you’re just about to get busy, put someone on NOW! Otherwise you’ll be too flat out to recruit, induct and train once things pick up. You’ll be kicking yourself later.

   Also, if you have a track record of creating growth in your business, back yourself to continue on this track. Have confidence it will continue and that you can make it happen. If you can see growth is coming, put the resources in place now.

2. Affordability.

   Putting on a new employee brings additional costs. And it takes some time until they are productive and contributing to income. So, yes, you need to work out how much this will cost you.

   1. Total up their employment costs per month.

   2. Then gross this up by your GP %.

   3. This shows your new breakeven sales point. This is the level of sales you need to hit to cover their costs.

   4. Now work out where those additional sales will come from. Until then, this is a real cost.

3. Working Capital.

   Following on from the point above, note down your expected sales for the next six months. If these are not giving you the additional sales needed to cover the cost of your new employee, you will need to fund this cost. Ensure you have the funds available or can access a line of credit to cover this shortfall. This should not be a reason not to employ your new person. It’s just something you need to consider and be sure you have the funding available.

4. Opportunity Cost.

   What if you don’t employ your new employee? You and your existing team will be stretched thin as you hit your busy season. You will be unable to provide good customer service. You’ll be rushing, scrambling. Think of the missed opportunities, the business lost, the money still sitting on the table. How much will this cost you if you don’t do it?

5. Position Descriptions and Training.
   

   If the busy season is not yet on you, this is the perfect time to write the Position Description and put your training plan together for your new employee. You won’t get the chance to do it later. Do it now. It sends such a powerful message to your new employee when they start, to know you have prepared for their joining your business. A clear position description, with duties and accountabilities sets the expectations clearly, up front.

So, as you consider hiring your new employee, give these five points some consideration. And the final question to consider is this…

If not now… when?

Let me know if have any questions, or if you would like to discuss further.

Peter