In epsiode 22 of the BizNation Podcast, we chat about this topic…
A question I see bouncing around social media groups – is when do I hire in my business and closely followed by, do I hire an employee or do I outsource to a private contractor?
It’s a massive question many small business owners face and we are going to step through this topic together today!
So when thinking of hiring a team member, the first step is, when do I hire in my business, this is such a common question asked and many small business owners are confused by the pieces of this puzzle.
So let’s break this down together;
Knowing when, this changes from business to business because hopefully you’re not just hiring because you’re alone and need a friend.
So this answer comes down to a few parts.
Your business status, are you making enough money to hire someone and do you have serious tasks a team member can help you with.
For the financial side, you of course need to know your numbers and see that you have the profit in your business to be able to spend the wages, consistently.
The last thing you want is to hire someone based on a single wave of business and then have to tell that person, sorry I can’t afford to keep you.
So of course this changes and no one has the crystal ball into the future, but you need confidence in your numbers for the stability to employ a team member.
If you don’t have that stability or you’re not unsure, you can also consider a casual employee or even a short term outsourcing arrangement to help you through a busy period.
Another way to look at it can be decided based on the ROI, return on investment I know what you’re thinking, ROI, isn’t that for a marketing budget like a campaign, well yes it is, but also your ROI can become an equation you use for hiring a team member.
You might be SO busy that you just need an admin assistant or someone to pack your customer orders or someone to help with some admin tasks you feel are not giving you a time value approach to your service based business.
For the return on investment, are you going to meet your customer needs faster for sending out product orders and therefore impressing your clients with the faster delivery.
Is a team member going to give you a better delivery experience for your customers helping turn them into returning customers.
Perhaps you’ve been so busy working IN your business rather than ON your business that a new team member will free up your time to make your packaging prettier.
Therefore this could improve what the customer experience receives and also have more return customers leading to more orders in the future.
The thing about return on investment with a team member, it may not show the results as fast as a marketing campaign.
Maybe your business is a service based business and by spending time checking emails and answering social media questions takes you off the tools and therefore actually slows your ability to have more income because you can’t fit in another client due to the admin side of the business.
Having an admin/social person in your service based business can free up your time to be able to service clients faster, this could then free up your time to have more clients.
How much do I pay – another common question and also something to consider.
Employee vs outsourced team member can challenge our budget senses.
You can hire, depending on the award for your industry let’s say from $25 an hour for an employee, then you have the few added costs like workers compensation, without going into all the detail let’s call this another 25% for employee costs, so this is around $30 per hour.
An outsourcing options presents itself at lets say $45 per hour. Your business budget brain kicks in and thinks, oh it’s cheaper to have an employee.
Well, this is not necessarily the case.
Because the assistant at the $25 per hour might need a lot of training and guidance from you, rendering you time poor for a while.
But the outsourced professional might be able to hit the ground running and start delivering for you faster and need a lot less training and your time to get started.
So it all depends on your business, what you do, what you need and I think you get the idea.
Another way to look at the equation is if your service based business generates you on average $100 an hour and you have become restricted in your revenue potential from the tasks you need help with, then the $45 an hour making you $100 per hour is a no brainer.
We have covered a bit of when, we have touched on a bit of who, but what else do we need to consider.
One that often gets overlooked and I did touch on it before, but let’s dive into the tasks.
As business owners we tend to be a little bit of the control freak when we have been in business for a little while.
So hiring someone often surfaces questions like, what can I get them to do.
And then we can be known to start thinking, well, by the time I teach someone that part of my business, I might as well have done it myself.
But hey, YOU, yes you, don’t forget, your revenue isn’t going to grow while you keep doing everything yourself
I like to break this into 2 baskets – repeating tasks and one off tasks. And then I expand those 2 baskets into 2 more baskets, the stuff I like doing vs the stuff I hate and can palm off.
So you might have tasks across these 4 baskets and sometimes as business owners we have to just suck it up and do things we don’t love because we are the authority for that task. But there a million things that you don’t have to do and things you can assign to others.
So making a clear list, sometimes by documenting your day for a few days and you will quickly get a great list of things you can give away.
Make sure the list of tasks is clear and also keep in mind that the list might need flexibility so ensuring your team member or even outsourced team member is flexible is also important.
So again going back to employee or outsourcing, having that clear task list can determine this answer.
If you have a heavy need for someone on social media in your business, you either need to consider this type of employee or having it outsourced to a professional for the ROI results.
If you need someone on admin but it’s for direct contact with your customers, making calls or emails to clients or potential clients, think about how you feel for this to be done remotely by a VA vs having an employee by your side for you to mentor the way you like them.
It’s your business and of course it’s your decision, but you almost need to look across the task list and paint the picture of what the options look like so you can make an informed decision.
Also another aspect to consider is if you go with an employee, do you get the junior at the lower rate for your industry vs hiring a more experienced seasoned team member.
Juniors can come with issues from time to time, it could be their first job and they are not used to working, or they really need you to hold their hand for some time. So sometimes the cost saving doesn’t work for time saving.
But on the flip side of that if you come across someone that ticks all the boxes experience wise, sometimes they can be overqualified and get bored with your role if it’s on the lower end of experience needed.
Another option for a new team member is insourcing – this is when you find someone in your family or friend network that could do the task. Many people struggle to work in these relationships, but it’s certainly worth considering if you know the right person.
So again, back to the task list to review the options for this element.
I urge you to also consider that some more experienced candidates as they can bring so much more to the table, they might have great ways of working and know of other ways to improve your business which can lead to an even higher return on investment.
Sadly at the end of the day, you need to put in some work to find all the answers, you need to know what you want, know your business numbers for when you want it and you are the one that needs to set up the role for success!
Stay tuned for a future article on how to hire a new employee and engage with outsourcing which will also feature as episode 24 of the BizNation Podcast
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