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How do you know when it's time to take on your first staff member?

Discussion in 'General Business Forum' started by ChrisGoodfellow, Aug 7, 2015.

  1. ChrisGoodfellow

    ChrisGoodfellow Editor Staff Member

    Posts: 130 Likes: 36
    I'm working on a feature for BusinessZone that looks at how and when small business owners know it's time to take on their first employee, in conjunction with Milkround. It's a question that we've been asked a number of times and it would be great to share some of your expertise.

    What did you take into account when you went through the process? Is it a case of cashflow modelling or did you have to do it on the fly?
     
    Last edited: Aug 18, 2015
    Posted: Aug 7, 2015 By: ChrisGoodfellow Member since: Jul 10, 2014
    #1
  2. stevebrownlie

    stevebrownlie UKBF Regular Full Member

    Posts: 301 Likes: 65
    For me the decision rests on the long term plans of the business owner. At some point, they will reach a point where they can't grow at an optimal rate due to having too much 'existing work' if they don't hire someone. Either they won't have enough time to network, call, e-mail, do social, plan advertising (whatever they were doing to succeed in the first place) and growth will level off (or worse), or they'll have to start turning work away.

    It can be difficult as analysis of current cash flow can sometimes show that the point where too much work starts to reduce growth can be just before you can comfortably afford the new member of staff.

    That's why it's important to look carefully at the cost per lead and conversion rates you've been experiencing (including costing time spent networking to get x leads etc) so you can accurately forecast the benefit of taking someone on slightly ahead of time, and work out how long it will take for increased growth to move the business to a better position.

    Too many businesses 'cap out' because they won't invest until it's easy to afford it, but it won't be easy to afford it because they don't have enough resources to grow AND do their current workload.
     
    Posted: Aug 8, 2015 By: stevebrownlie Member since: Aug 10, 2006
    #2
  3. Funding for Communities

    Funding for Communities UKBF Regular Free Member

    Posts: 197 Likes: 47
    Hi,

    I took on my first employee all the way back in 1988. I knew it was time to take on staff as I had simply run out of hours in the day and could do no more. I know a lot of small business owners get to the same point before taking on the burden of employing people.

    Mike
    Funding for Communities
     
    Posted: Aug 8, 2015 By: Funding for Communities Member since: Jul 22, 2015
    #3
  4. ldjames

    ldjames UKBF Regular Full Member

    Posts: 281 Likes: 39
    Same as Mike: just not enough hours in the day.
     
    Posted: Aug 8, 2015 By: ldjames Member since: Nov 14, 2013
    #4
  5. TODonnell

    TODonnell UKBF Ace Full Member

    Posts: 1,189 Likes: 172
    My opinion:

    - If you find your workload is actually making you ill;
    - If delivery times are extending and customers are complaining;
    - If you're working long hours and the weekend and your service will still provide a fat net profit if you take someone on to do the grunt work.
     
    Posted: Aug 10, 2015 By: TODonnell Member since: Sep 23, 2011
    #5
  6. consultant

    consultant I Can Help Your Business Staff Member

    Posts: 5,121 Likes: 702
    As mentioned, not enough hours in the day, but also, when the work you are doing does not make money or get new clients e.g. administration (or sales if you are good at/like admin!).
     
    Posted: Aug 10, 2015 By: consultant Member since: Jan 21, 2008
    #6
  7. ChrisGoodfellow

    ChrisGoodfellow Editor Staff Member

    Posts: 130 Likes: 36
    @stevebrownlie Good point about forecasting, hopefully it can help beat the chicken and egg-like issue of lack of staff restricting growth/waiting until you've grown your business and can afford more staff.

    I wonder what role temporary staff can play? Do they provide a quick and easy way to trial bringing in a new member of staff?
     
    Posted: Aug 11, 2015 By: ChrisGoodfellow Member since: Jul 10, 2014
    #7
  8. Funding for Communities

    Funding for Communities UKBF Regular Free Member

    Posts: 197 Likes: 47
    Hi Chris,

    Whenever I employed temp staff it was more trouble than it was worth. If your taking them on for simple manual jobs like unloading vans etc: then it's not too bad but anything that requires a bit of training !!

    Mike
     
    Posted: Aug 11, 2015 By: Funding for Communities Member since: Jul 22, 2015
    #8
  9. avalanche

    avalanche UKBF Regular Free Member

    Posts: 174 Likes: 30
    When you have all your systems in place and a cash reserve large enough to pay their wages for the time it takes for them to become profitable
     
    Posted: Aug 11, 2015 By: avalanche Member since: Aug 19, 2010
    #9
  10. Jake McHugh

    Jake McHugh UKBF Newcomer Free Member

    Posts: 2 Likes: 0

    Thats the same ethos as myself - the girlfriend hates me for it though!!

    I decide to hire
    1. When we can afford to pay them without having to re-forcast sales
    2. When I physically cannot do any more and my to do list is getting longer and not shorter.
    Really exciting taking on your first staff member, its horrible and upsetting if/when they leave to move onto their next challenge.
     
    Posted: Aug 11, 2015 By: Jake McHugh Member since: Aug 11, 2015
    #10
  11. Jbriant

    Jbriant UKBF Newcomer Free Member

    Posts: 1 Likes: 0
    When you find yourself spending more time than you should carrying out a task. Not only does taking someone on help ease your workload but the skills they have can be greater than yours in certain areas.

    Josh - IOB HQ
     
    Posted: Aug 11, 2015 By: Jbriant Member since: Nov 16, 2014
    #11
  12. boring-friday

    boring-friday UKBF Enthusiast Free Member

    Posts: 568 Likes: 166
    When I think they'll make me more money than they'll cost me. My first employee was to pack because I thought the 5 hours a day I'd save could be spent on getting more sales(profit) than they're costing me.
    Same as everything, I signed up to some shipping software when I decided I could make more money in the time it saved me than the £50 it costs.
    Hired a VA to save emails and spam facebook when I thought they'd get me more sales than they cost me.
    Even if I buy a sofa for a shop or buy a £10 poster its because I think that it will indirectly get me more money than it costs me. Everything should be directly related to how much money you think it will make you whether directly or indirectly imo
     
    Posted: Aug 11, 2015 By: boring-friday Member since: Jun 5, 2015
    #12
  13. BustersDogs

    BustersDogs UKBF Ace Free Member

    Posts: 1,173 Likes: 216
    When I felt like I was so tired I was nearly dying, couldn't fit any more work into the day, couldn't give my best for the work I did have, but it was still coming in and I struggled to say 'no'. Years later I heard the phrase 'hire when you're hurting' and it fit perfectly.
     
    Posted: Aug 12, 2015 By: BustersDogs Member since: Jun 7, 2011
    #13
  14. Paul_Rosser

    Paul_Rosser UKBF Big Shot Full Member - Verified Business

    Posts: 4,543 Likes: 1,105
    Most business owners don't realise their time has a value and their job shouldn't be to do whatever it is the company does, theirs is to push the company forward and increase turnover/profit.

    Employing staff is key to this and should be taken on as soon as possible.

    Started our company in 2012 and now employ 10 people who deal with the day to day running of the business.
     
    Posted: Aug 12, 2015 By: Paul_Rosser Member since: Jul 5, 2012
    #14
  15. ChrisGoodfellow

    ChrisGoodfellow Editor Staff Member

    Posts: 130 Likes: 36
    Powerful quote!

    @Jake McHugh I've often heard the management buzz phrase that's something along the lines of "train people to be good enough to leave". Sounds like a good principal, but a horrible thing to embrace!
     
    Posted: Aug 12, 2015 By: ChrisGoodfellow Member since: Jul 10, 2014
    #15
  16. FD Analytical Accountants

    FD Analytical Accountants UKBF Contributor Full Member

    Posts: 44 Likes: 2
    Depending on the type of role the current apprentice scheme is really good, I'd highly recommend it and there are some great young apprentices out there. Might be worth considering?
     
    Posted: Aug 14, 2015 By: FD Analytical Accountants Member since: May 22, 2015
    #16
  17. Bartholomew Hearn

    Bartholomew Hearn UKBF Contributor Free Member

    Posts: 41 Likes: 5
    Never! I'll buy a bag of coke and clone myself! #kidding.
    I wish I could say "when I have no more hours a day", but the fact is that it's all about being able to afford it.. That's when I would/will some day/ hire my first employee :)
     
    Posted: Aug 18, 2015 By: Bartholomew Hearn Member since: Jun 8, 2015
    #17
  18. TODonnell

    TODonnell UKBF Ace Full Member

    Posts: 1,189 Likes: 172
    You could maybe hire someone part-time to do dull, simple stuff. Then you wouldn't have to spend too much.

    Write down the tasks and when they have to be done by and hand it to Minion No. 1.
     
    Posted: Aug 18, 2015 By: TODonnell Member since: Sep 23, 2011
    #18
  19. HazelC

    HazelC UKBF Enthusiast Free Member

    Posts: 824 Likes: 186
    When I'm busy 75% of the time I will bring on another member :)

    I also have an admin person because I don't enjoy doing admin and I HAD a sales person because I don't enjoy doing sales. I set up my own business to enjoy what I do, not to do things I don't want to do.

    Hope that helps?
     
    Posted: Aug 18, 2015 By: HazelC Member since: Sep 7, 2013
    #19
  20. Dmitri Fantastic

    Dmitri Fantastic UKBF Contributor Free Member

    Posts: 38 Likes: 3
    ez pz! there are two cases: when I can afford it or when I desperately need it.
     
    Posted: Jan 13, 2016 By: Dmitri Fantastic Member since: Jan 8, 2016
    #20