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When to Hire Staff for Your New Business

Posted by PCC Small Business Development Center on October 02, 2015

when-to-hire-staff-for-your-new-businessExperiencing success in a new business venture is a difficult, yet rewarding process. However, growth brings its own unique set of challenges as you try to keep up with demand and take your company to the next level.

One of the biggest challenges is knowing when to hire staff for your new business.

Maybe you’ve decided to take on additional responsibilities as the owner, rather than hiring for your new business. Or it may be the case that you plan to rely on freelancers or contractors to fill in the gaps.

Knowing when is the best time to hire new team members will depend on a few different variables, and a miscalculation can lead to harsh consequences. Below are some factors to consider when making these decisions, and how to know when the time is right.

It Might Be Too Early to Hire

Premature hiring can cripple a business both in the short and long term. Being overstaffed without the client base to support new employees can cause your business to be strapped for cash. Additionally, it can prevent you from hiring new workers to fill other needs. Hiring for your new business requires both a commitment to the employee combined with an exit strategy if it doesn’t work out. Many new businesses underestimate not just the money but the time required to hire new staff. Outside of monetary compensation, this can include onboarding, training, work space and insurance. Employee laws also vary from state to state, with some making it quite costly to let go of an employee. Even if it's for the simple fact that there’s not enough business.

A prudent approach is to hire little by little as your business grows. By not hiring too many people too early, you can avoid the pitfalls mentioned above and with each new hire, refine your human resources approach.

It Might Be Too Late to Hire

Between meeting clients, tracking finances and managing social media, you’ve finally had enough and decided it’s time to start hiring to spread the workload. But is it possible that you should have hired someone much earlier? New businesses that are overly committed to going it alone often experience painful consequences along the way. We are now in the era of a job seeker’s market, resulting in 80% of small businesses not being able to find qualified staff. If you miss the boat on the right candidate, it might be a while before another one comes along.

Business owners short of staff also tend to flounder in the customer service department. A sudden inundation of phone calls or support tickets can expose the vulnerability of being shorthanded. In addition, when you do begin hiring for your new business, you may not have enough time and energy for proper training and onboarding. Many times this leads to employee dissatisfaction and high turnover, forcing you to start the process from scratch.

One solution is to begin collecting a pool of candidates well before you’ll need them, so when the time is right you have plenty to choose from. Thinking ahead allows you to have a plan in place for providing the necessary resources dedicated to ensuring employee success and retention.

It's the Right Time to Hire

There are a handful of key indicators to look for that signal now is the right time to start hiring for your new business. On the positive side, you could be turning down work because you don’t have the manpower, in which case you’re missing out on revenue. Conversely, too many customer complaints is a clear sign you’re understaffed and could result in lost business. As an owner, if you’re unable to focus on the most important issues and clients in your business because your focus is too distracted, you should probably begin the recruitment process immediately. How you find new employees can be just as important as knowing when to hire your staff.

While many new businesses opt for a contractor as a lower risk option to a new hire, that approach does bring about its own set of challenges. Taxes, employee classification and contract terms for contractors can be complex for the uninitiated. Also be aware that, as contractors, those individuals won’t necessarily be fully devoted to building your company. Rather, contractors are probably using the experience to build their own practice and won’t devote any spare time to your company.

Hiring full-time employees allows you to impart on them your unique set of company values, enabling you to build successful and highly functioning teams. This pays dividends for future hires, as experienced employees become key contributors in the onboarding process. Once the new hire familiarizes him or herself with standardized policies and procedures, they begin to develop a positive, team-first attitude that contributes to organic business growth.

The bottom line is that new business owners should ask themselves the question: Is not having enough employees hindering my business from growing? By recognizing the risks and consequences associated with bringing on too many people too soon or adversely delaying hiring for your new business, you give yourself the best chance to hire the right person at the right time.

We mentioned a few of the signs indicating when to hire staff for your new business. Have you seen or experienced any others in your company or one that you know of? Please go ahead and share with us in the comments.


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The Oregon Small Business Development Center Portland Community College has  helped thousands of businesses over the past 40 years. We combine one-on-one  advising with programs taught by business experts, giving our clients the  resources they need to grow their businesses. We’ve celebrated many successes  with our clients. We'd love to celebrate your success. 

Topics: Professional Development, Small Business, HR & Organizational Effectiveness, Growing a Business

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