Your hard work is starting to pay off. Your business is growing and you want to make some new hires in order to continue growing and keep your customers happy. Here are some important questions for you to consider before making those new hires.
- Can I afford to make a new hire? This question is always the first question to ask yourself. If your business is growing its revenue, but its profits are a little skimpy, then put some careful thought into your hiring process. If you bring on a new hire, how does it impact your profits? Let’s look at a very simple example. If your business presently has $5,000 per month in net income and your new hire is going to cost you $10,000 per month, your business will immediately swing to a loss of $5,000 per month. How many months of losses can your business sustain before your new hire starts generating revenue for your company? What if your new hire is not even going to be responsible for generating revenue? If you have a weak balance sheet, then you should carefully consider your strategy for making new hires.
- Should I hire a salesperson or a production employee? If your customers are happy with your product and service and your employees are not overworked, then you may want to consider adding a salesperson to bring in more revenue. If your employees are overworked and service is slipping, then you may want to consider adding a production employee. There is no scientific answer to this question. As your company’s leader, you need to rely on your gut feel and experience to determine how many people are required to keep your customers happy and provide your business with a profit. Furthermore, you don’t want to hire more people and then find that your business is now making less money than it was making before you made the new hires. It is a delicate balance.
- How do I ensure that I make a successful hire? There are two items that are conducive to making a successful hire. The first is to create a well-defined job description. The second is to stick to that job description. Nothing creates discomfort more than a poorly-defined job description. Your new employee may come to work every day and think that they are being “successful” while you are wondering why your new hire is not being “successful.” Therefore, a well-defined job description helps to manage your expectations and your new hire’s expectations. Last, but not least, have you ever heard of the saying that “you need to put the right butts in the right seats?” All of the different personality types play a role in a successful business. Make sure that you have the right people in the right roles in your business.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more interesting topics to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.
Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.