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How to know when it’s time to bring on an extra pair of hands – Insight from Invoice2go

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Whether you’re just getting started or have been running your business for years, making the decision to hire your first employee is a significant one, especially today in a time of increased uncertainty.

It wouldn’t be an exaggeration to say that 2020 hasn’t turned out as many Australians would have planned.

Despite the challenges, however, it’s also been inspiring to see the innovation small businesses have displayed as they’ve adapted over the past few months.

From product innovations and service diversifications, to engaging with customers on new digital platforms, Aussie freelancers and small business owners have demonstrated their determination to embrace working in the ‘new normal’.

While the situation remains ever-changing, and no one yet knows exactly what the ‘new normal’ will hold long-term, it’s important to consider how your business can respond and grow in the new future of work.

There’s no one-size-fits-all approach, however one strategy could involve hiring an employee.

If you’re currently running a one-person operation, and are considering hiring your first employee, here are some tips to help you figure out when the time is right and what to do if you’re ready to make the leap.

Thinking finances

Before any other consideration, take the pulse of your business’ cash flow. After all, if you don’t first have the financial foundations in place, it’s unwise to take on the responsibility of a bigger wage bill.

While you might occasionally defer your own paycheck to ensure enough cash remains in the business, an employee will expect to be paid regularly, irrespective of cash flow.

So, study your cash flow on both an annual and monthly basis to truly understand your business’ overall financial position.

An annual view indicates whether you have a large enough surplus to cover an employee’s wages, while monthly statements will demonstrate both seasonal fluctuations and the reliability of cash flow from one month to the next.

In addition to wages, also consider other associated costs such as extra equipment, tools or resources, worker’s insurance, superannuation, or additional training.

If you determine it’s a financially viable option, there are various other considerations.

Short-term solutions

During busy periods – such as those experienced by a gardener during the spring or an accountant during tax season – it can be tempting to hire someone quickly to get the work done.

However, seasonal fluctuations are common, so if you look ahead and know that, in a month or two, your workload will return to a level suitable for just one, it’s worth considering a short-term arrangement such as hiring freelancers or contractors.

Alternatively, including a three-month trial period in a new employee’s contract allows you to test the waters before making a longer-term commitment.

If, over a sustained period, you’re forced to either turn down work or work additional hours to finish a job it’s a good indicator that you’re ready to hire someone on a longer-term basis.

Clearly outline the role

While it can be difficult to share responsibility with something so personal as your business, outlining an employee’s roles and responsibilities will give you a better idea of whether you need full-time or part-time assistance, or a seasonal freelancer or contractor.

Distinctly outlining the position’s tasks will provide you with a clear picture of who you need and when.

Business goals

While it’s likely you have long-term goals and ambitions for your business, when was the last time that you sat down to map out how you’re going to attain them?

Before hiring an employee, it’s first important to outline clear milestones that you want to achieve and the steps required to reach them.

Ask yourself, “Is hiring a new employee one of those steps?” or “Will doing so help me accomplish those goals?” If the answer is yes, begin the process.

However, if the answer is no, take some time to reassess your workload and skills to understand how you can realise your vision as a one-person-band – at least until you’re ready to scale.

Your role in the business

Running a small business is a personal endeavor requiring a great deal of time and determination. As a result, some small business owners will always want to maintain a high degree of control.

Others, however, might decide that they want to take a small step back to run the business, rather than be the business. To understand your role today, in three months, one year or five, think about why you started it in the first place.

Was the plan to grow your venture, or did you have the intention of maintaining a steady, sustainable one-person operation? The answers to these questions should go some way to helping you understand whether or not to hire an employee.

Whether you’re just getting started or have been running your business for years, making the decision to hire your first employee is a significant one, especially today in a time of increased uncertainty.

However, by carefully forecasting and thinking strategically, you may decide that an employee is just what you need to begin growing into the new normal.

Chris Strode is the founder of Invoice2go, the mobile invoicing app that gives small businesses and contractors control over their time and business. As a small business owner from a family of tradespeople, Chris created Invoice2go out of frustration with the lack of simple invoicing options available. For more visit here.

How to know when it’s time to bring on an extra pair of hands - Invoice2go insight
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