Hiring for a small business involves a delicate balance. Investing in good employees is necessary for scaling your business, but hiring too many people too soon can cause cash flow and management problems. It’s also important to be certain that it’s the right time to hire more employees because attracting and hiring the right talent can be time-consuming for an already overworked small-business owner.

So how do you determine whether it’s the right time to hire before jumping in to the process? There a few key indicators:

1. You’re still working on EVERYTHING

You answer phones, coordinate sales, manage bookkeeping, develop marketing strategies, oversee operations and clean the bathrooms. Not only is keeping up with this many responsibilities grueling, but it’s also distracting you from strategizing to achieve your long-term business goals. While it’s beneficial for small-business owners to be active in the nitty-gritty aspects of their business, micromanagement and a do-it-yourself mentality can result in burnout and even business failure. To scale up, you need to gradually let go of controlling some aspects of the business and focus on growth. New hires are an essential step toward delegating tasks.

2. There’s a clear role that needs to be filled

Sometimes in the fluster to keep up, small-business owners feel pressured into making quick hires without really thinking about how additional employees will add value to the business. Without a clearly defined role, new hires may have too many—or not enough—tasks to work on, which puts stress on both the employees and business operations. A hurried hiring process also entails little formal training—a recipe for a disgruntled workforce. On average, 40 percent of employees who receive poor job training leave their positions within the first year, which can be costly and chaotic to a small business.

On the contrary, if you can list out a clear set of daily tasks and long-term projects that could be fulfilled by adding on specific roles, and you have adequate time to properly train new team members, it’s a sensible decision to hire.

3. You can afford to hire more employees (and can’t afford not to)

As your business starts to take off, you have more money coming in, but it comes hand in hand with a heavier workload. Consequently, customer service may suffer due to being short-staffed and you could be at risk for losing customers. In this case, hiring more employees is essential for maintaining the operations that are bringing in revenue.

Some small-business owners may be inclined to keep operations lean and hold on to the extra revenue. If your small business is in survival mode, this may be necessary. Otherwise, it just limits your potential for growth. Every new hire can make money for the business in some way. Consider how much value new employees can add to the business—will they help bring in sales, or keep operations functioning? Then, compare that value to the cost of hiring and training new employees to determine if you’d be missing out on profits by holding off on adding more employees.

4. Your business’s growth is sustained

Before hiring more employees to accommodate a rush of business, be certain that it’s not a temporary surge. If demand settles down after a few months, you could find yourself paying the salaries of nonessential employees or forced to layoff good workers. Try forecasting growth to predict whether or not you’ll need the extra long-term help. If you’re unsure if sudden business growth will be sustained, consider hiring temporary help or outsourcing work. That way, you can easily adjust your spending on labor to meet demand as it rises and falls.

Leading research on the top 1 percent of small-business owners reveals that building a strong team is essential for long-term success. In fact, more than 50 percent of surveyed small-business owners reported that employees and their standard of customer service were the only drivers of competitive advantage for their business. With this in mind, don’t be afraid to hire more employees if the signs are indicating the time is right. The next step is developing a hiring process and staying on-track for sustained growth.

Jeffrey Kadlic

Author Jeffrey Kadlic

Jeffrey Kadlic is a Founding Partner of Evolution Capital Partners, a nationally recognized and award-winning private equity firm dedicated to driving small business transformational success. His passion is simple: arm and inspire entrepreneurs today with the operational leadership, capital management, and success drivers that competitive markets demand. He is a creator of Evolution’s Five Fundamentals, the systematic organizational change agent that transforms the challenges small businesses face into sustainable and profitable growth.

More posts by Jeffrey Kadlic

Contact: (216) 593-0402