Dear Preston Excerpt: When To Hire Outside Help
June 4, 2013
My business is just me, working really hard. It would be good to have some help, but I’m not sure it’s worth the expense. How do I know whether it’s worth it to take on an employee or two?
Alone or Together
If you find yourself working twice as much as you used to and still not getting everything done, it’s a good time to consider what’s going wrong. You may just need to organize your time better—but if we are honest with ourselves, I think we instinctively know the difference between when we’re truly being overworked and when we’re just being inefficient. I remember the first time I ever did an event in the gallery of Christie’s auction house. I was still working on my own, and I’d been hired to provide flowers for a cocktail party that was to take place in this enormous hall. I was very organized and showed up quite early to set up, but I still found myself scrambling to finish the flowers half an hour after the party had started! The gallery, needless to say, was not happy and asked me to leave before the job was entirely done. I felt terrible and worked even harder on the next few jobs to be organized and early, and yet the same thing happened a couple more times—I always seemed to be arranging as guests arrived. Gradually it became clear to me that organization and preparation just weren’t enough anymore. I needed help!
I started hiring a couple of staff members to help me set up jobs, but as with everything else in my early days, I hired folks without analyzing my situation to see if I could afford them. I thought that as long as I had business coming in and I needed the help, paying them would take care of itself. We already know where that ended up: me running a cash-poor business that sank further into debt because I wasn’t paying attention to my expenses (like employees!) and wasn’t charging properly.
So if you decide you really do need the help of an employee, analyze your finances very carefully so you know whether you can afford it. First, review your profit margin on your recent jobs. If you have been charging properly for some time, you should have a business nest egg that can help you cover the expense of a new hire. You want to have at least two to three months operating capital on hand, before taking on a new employee. Second, analyze the business that has been coming in over the last year and is coming in now. If you see a steady pace of growth over a year, you should be able to take on an employee and still make a profit.
Congratulations, Together, on being ready to expand you’re business! But do be cautious before making that hire, for the sake of your business and for the sake of the potential employee.
Question: When do you think it is a good idea to hire help? What are some lessons you have learned through the process? Any tips for those looking to hire the first time?
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