How do I know when it is time to hire someone else?

In order to achieve scalable growth in a successful company you eventually need to hire more people. But how do you know when is the right time to hire someone or whether or not you actually can afford a new hire. This is a problem that arises in many small to medium sized companies. Sometimes, when we deal with family owned companies they toil with hiring people outside of the family as they have typically developed trust issues. Truth is as a business owner you have to decide what kind of company you want to have. If you really want to grow it then you need to hire experts in the field outside of your immediate network.

There is basically two schools of thought when it comes to hiring timeline. The first school says that you hire someone to grow your company. In this instance you may have a successful company but you want more growth so you want to hire another sales person or a new member to the marketing team. The purpose of this hire is to grow your business. If you add a commission only salesperson then there really is no risk but immense possible return (Remember it is all about payplans). People can grow your company but you have to make sure that you are not stretching yourself too thin.

The second school of thought is that you grow so fast and to a size that you almost cannot handle, you are eating and sleeping work. Because you are so busy you decide to hire someone to take the load off so that you can continue to grow. This one is generally more common among small businesses as you typically know that you can afford to hire someone else, you practically cannot afford not to. The questions sort of becomes “what came first, the chicken or the egg.

Basically, hire someone to help you grow or grow or hire someone because you physically cannot do anymore with the team you have. I would not say that there is a right answer here. I would say that if you are new to hiring people and recruiting people that the later of the two options is best. In the first situation you may not have tons of cash to throw around. You are doing well but hiring someone may be a little tight and you are really counting on the business they bring in to cover their salary. That is why the first one option could be a bit riskier. However, if you are experienced in recruiting or know somebody that would be perfect for the role and are sure they can perform, option one is the easier of the two.

Option 2 allows for significant cashflow coming in above and beyond your fixed costs. This means that you have plenty of cash to throw at a new hire and honestly as long as they do a half descent job it is helping your case. I do not want to get into cashflow management too much as that is a story for a different day.

Take a pen and a piece of paper and figure out where you are at in your business: Are you growing in work and cashflow is a non problem or are you making a descent living growing steadily but a couple thousand to a new hire might be tough? Once you know where you are you can develop a plan to see which option would be best for your situation.

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