Can I Afford to Hire?

Are you reaching a point in your business where you’re asking the question "Can I afford to hire?”

First of all, if you’re asking this question… congratulations! That means so much of your hard work is paying off, and your business has grown to a point where you need some extra reinforcements.

But with the excitement of growth comes new and unexplored territory, which can be scary.

Now that you know that you need to hire, it’s time to consider whether or not you can afford to hire, which is a different problem to work through.

Here are 4 steps to help you determine whether you can afford to hire:

? Step 1: Forecast Proactively

The first step is to proactively forecast what you think you can allocate to a new position. Don’t forget to consider not just the hourly rate of salary, but also taxes and benefits. Look at your ongoing revenue and what you’ve been able to achieve in the past. Then, consider your growth revenue goals. Budgeting isn't just about current numbers; it’s about where you aim to achieve. You should know what your net result is from this new position you are considering hiring. Would they save you time? Or are they generating money?

? Step 2: Invest Ahead of Time / Buy back your time

Sometimes, you need to invest before you officially feel “ready” because opening up capacity is crucial for generating more revenue. Hiring can be a leap of faith, but with a well-thought-out projection, it’s a strategic move to propel your business forward. Otherwise, consider hiring to free up your CEO time. What is currently on your plate that you can hire a new person to take from you?

? Step 3: Understand Your Budget Allocation

Understanding your budget allocation is key. Analyze what portion of your budget can be directed towards hiring someone new. This figure can increase as your business grows, but start with what you can afford now. It can be a part-time role that grows to full-time or a contractor that becomes an employee. Make sure you are clear on the scope and skills needed for that role.

? Step 4: Determine Affordability

Next, determine the affordability of the role you're looking to fill. What is the minimum amount or time or money you need to get back from this role? Do some research on current market rates for that role and decide if you can afford to bring that role for the next 90 days from a cash flow perspective, even if they are not yet producing big results. I find most business owners don’t have the cash runway to hire new employees, and end up running out of money and having to take out a loan (which is an option as long as you have a plan to pay it off).

Remember: it's never too early to start planning for growth. By understanding your budget and setting clear goals, you can make informed decisions about hiring that will help your business thrive.

Want to know if you are on track to achieve your goals for 2024?

Is your business growing? Could you get paid more from your business? Do you need to refresh your numbers? Can you afford to hire? Is your cash flow healthy?

Let us help you answer these questions!

BOOK A CALL HERE

Here at Wealth and Worth Within, we’ve got your back when it comes to financial projections. I posted this video to Instagram on this very topic, and I’d love for you to check it out and share it with anyone who can benefit from this content. Make sure to follow and comment with any questions or take aways.

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Best regards,

Carla Titus

Wealth and Worth Within