It’s a common dilemma: your small business is booming and clients are happy, but it’s starting to strain capacity and you wonder if it’s time to bring on additional staff. If you hire too soon and business slows, it could turn out to be a costly mistake. If you don’t hire quickly enough, the negative impact on quality, service, and productivity could stall your company’s growth.
Expanding the workforce is a major decision for small businesses, and knowing when to move forward is not an exact science. Here are some telltale signs to look for when considering whether or not it’s time to staff up:
Your business is growing.
Business growth is one of the strongest indications that you may need to hire more people. While a significant increase in the number of clients, sales, or projects is great for your bottom line, it also means additional work for your staff. Failing to have sufficient manpower in place to keep pace with sustained growth can have a negative impact on your team’s performance and morale, as well as your bottom line.
Keep in mind that a seasonal spike in business does not necessarily mean you have to bring on permanent staff. If sales pick up around certain holidays or during the fourth quarter, hiring temporary help is a cost-effective strategy for managing the extra workload during periods of high demand. Leveraging the skills of seasonal employees will help relieve the strain on full-time staff and keep your hiring budget in check.
You are turning away business.
Orders from current clients are steady and you are taking on new business at a pace that has your team working at top speed to meet delivery deadlines. Although you are managing to stay on track, you are passing on large orders or projects in an effort to avoid compromising quality or running the risk of not being able to meet customer expectations. When demand outstrips your staff’s capacity to the point where you are turning away lucrative opportunities, it’s time to consider bringing on additional employees.
Your employees are maxed out.
Employee overwhelm is another indication that it could be time to hire. Your existing workforce may be exceeding expectations, but continuing to rely on them to meet increased demand as you grow is likely to lead to overload and fatigue, which inevitably diminishes performance.
Signs that you and your staff could be overstretched include:
- A drop in efficiency and/or work quality
- An increase in customer issues
- Inability to grant employee requests for time off
- A rise in employee use of overtime
While feeling overburdened is common in many workplaces today, job-related stress has become a serious issue that business owners ignore at their own risk. If left unchecked, constant pressure and unreasonable workloads can lead to employee burnout, which saps productivity, fuels absenteeism, undermines engagement, and sabotages retention.
If your employees are showing signs of being on overload, focus on determining if the spike in business indicates you’ve reached a new stage of growth. In the short term, consider outsourcing specific tasks or bringing on temporary contractors to help shoulder some of the burden. If you believe the boom is sustainable, it’s time to expand your workforce.
Your goals have changed.
Small businesses often evolve as they grow. This can result in the need to create new products or services, add job functions, shift priorities, or expand responsibilities for an existing department or team. When you task your team with meeting new goals or increased expectations, you must also make sure you allocate the resources they need to achieve success. This includes having enough people with appropriate skills.
For example, if you decide to focus on providing a better customer service experience but your team is already overstretched, chances are they will not be able to deliver on what you’ve promised customers or clients. Instead, bring on additional representatives to help handle increases in calls and emails effectively. If you are creating a new function that can’t be managed by current staff, be sure to budget for hiring someone with the right expertise.
You’re doing it all yourself.
Many small entrepreneurs start out doing everything themselves. As the company evolves and the workload increases, they fail to adjust and delegate certain responsibilities to other staff. When an owner is so bogged down in the day-to-day they don’t have time to focus on big-picture issues, the business usually suffers as a result.
As the leader of a growing business, you need to take things off your plate to free up time for crucial tasks such as business development and lead generation. One way to determine if you need to hire additional support is to calculate the dollar value of your time per hour. If you or your senior-level staff regularly do work that would cost less if handled by someone more junior, it’s an ineffective use of time, money, and resources. Consider making a new hire.
Small business owners often choose to use working capital financing to cover the expense of hiring and paying new employees. Summit Financial Resources offers a number of options, including invoice factoring, asset-based lending, and inventory financing programs, that allow small businesses to harness the cash in their accounts receivable to keep things running smoothly. To decide if this is a viable option, review your budget and determine what you can afford to pay for staffing. If you come up short, our working capital financing can help you bridge the gap.
When deciding whether to hire more employees, take your time. Carefully assess your growth goals, workload, current staff skills, and budget, and make sure you feel confident that the value you are adding justifies the expense.
Working Capital Financing is a few clicks away.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.