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How to know when your business needs to hire staff

As your business grows, it’s likely you’ll need to to help. Hiring staff too soon can be a financial strain but hiring too late can mean your business fails to reach its potential. 

Being a one-man band opens in new window has lots of benefits when first starting out in your new business.

You can test the waters, keep costs low opens in new window and work your own hours without the worry of managing others opens in new window.

But to allow your business to grow, there comes a point when you need an extra pair of hands to help with the workload.

Recognising this sweet point is the tricky part.

Hiring your first employee is an important milestone for any new business start up.

Hire too early and you may face cashflow problems opens in new window, while leaving it too late could limit your business’s growth.

Hiring your first employee is a crucial decision that’s vital to get right.

Here’s our guide to help you decide if it’s time to take on your first employee.


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Your business is turning down work

Struggling to keep up with a demanding workload opens in new window or turning away work on a regular basis is a sign you need to recruit staff.

Being too busy to take customer calls opens in new window, missing customer deadlines or being unable finish work to a high standard are all clear signs that you need to hire your first employee.

Expanding your workforce means your capacity for work is expanded, allowing you to take on more projects.

But before you hire staff, it’s important to ensure that there will be sufficient work for the employee and enough revenue generated to pay them, otherwise you could be out of pocket.


You’re receiving complaints

If customers or clients are complaining opens in new window about the quality of your work or the time it takes to complete, it may be time to hire staff to help you.

If you’re stretched too thin to complete work to a high standard, additional help is vital.

Disgruntled customers opens in new window are bad for business – they won’t recommend you to friends and family and may even write bad reviews online that can damage your reputation.

Remember, it’s far harder to acquire new customers than to keep existing ones and losing one good paying customer can cost far more in the long run than hiring an employee.


You struggle to complete day-to-day tasks

Hiring someone to do the day-to-day tasks, such as answering the phones, emails, accounting opens in new window, can be a wise business decision if it frees your time up to focus on the clients or expanding your business with new initiatives.

If you’re struggling to find time to manage the admin of your business, such as invoices opens in new window and paperwork, hiring support staff can increase your productivity and revenue.


You need expert skills

You may need specific expertise to help you expand your business, such as marketing opens in new window, web site design, and accounting.

If so, consider whether this is required regularly – which would indicate it’s best to hire someone for this role – or whether it can be done on an ad hoc basis.

If this is the case, consider outsourcing the work to a third party opens in new window for a one-off payment.


You have to time to recruit

Hiring your first employee isn’t an easy decision.

It’s important to take time to select and hire the right person opens in new window.

Hiring the wrong person can be devastating for a small business, with increased time spent managing poor performance as well as the additional costs involving in employing staff.

Take time to interview prospective employees and put in place a probation period so you can quickly remove staff from your business who aren’t a good fit.


Your vision for the business needs employees

Decide whether you want to grow your business or keep it small?

If your business is a part-time venture or you prefer to work alone, or work when and how you want, you may choose not to hire staff.

However, if you’re aim is to run a highly successful business opens in new window, you will need to hire staff to help you achieve this vision.

And, if you plan in eventually selling your company, potential buyers will want hired staff rather than having to do it themselves.


You can write a detailed job description

Before hiring your first employee, it’s useful to create a job description opens in new window.

This should clearly outline their day-to-day duties and responsibilities.

This is a chance to clearly define what work needs handling, the skills required opens in new window, and the type of person you are looking for.

It should also help you to determine if there is enough work for a full-time or part-time employee.


You have the money

While hiring staff is a great investment if it allows you to take on more work and therefore generate more income, you should only hire staff when your business finances allow for extra expenditure.

Check your budget and business forecasts opens in new window carefully.

Not only is recruitment and training opens in new window costly, you’ll need to have cash reserves to pay monthly earnings and overheads until your new staff begin generating enough revenue to cover their costs.


You need a holiday or a break

Most owners of start up businesses put the idea of a holiday or time away from work on the back burner for some future date when work allows.

Hiring staff to ensure you can take time away from work can be highly beneficial, helping boost your productivity and improving your wellbeing opens in new window.

You don’t have to employ a full-time member of staff, consider hiring a temp or outsource some of your work so you get time away from your business to recharge.


Learn with Start Up Loans and help your business get off the ground.

Thinking of starting a business? Check out our free online courses in partnership with The Open University on sustainability in the workplace.

Our free Learn with Start Up Loans courses opens in new window include:

Plus free courses on climate and sustainability, teamwork, entrepreneurship, mental health and wellbeing.


Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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