Buy Time

Understanding the Cost of Expansion: A Guide to Efficient Hiring

November 02, 2023 Jacob K. Mead Season 1 Episode 18
Buy Time
Understanding the Cost of Expansion: A Guide to Efficient Hiring
Show Notes Transcript Chapter Markers

Ever feel like you're drowning in work and wonder if it's time to bring someone on board? We're tackling that crucial question in this episode and more. We're unpacking the markers that signal it's time to hire, and the financial implications of such a decision. Remember, expanding your team doesn't just mean more hands on deck; it means additional costs, taxes, and benefits that need to be factored into your business budget. But don't fret, we've got you covered with handy tools and resources like Gusto.

Running a business isn't just about the numbers, it's about the people too. How do you attract top talent? How do you nurture a team that feels valued and empowered? We're diving headfirst into these vital questions. Offering competitive pay doesn't just lure in skilled employees, it helps cultivate a team that's committed and motivated. We candidly discuss the sacrifices one might have to make, including forgoing your own paycheck. After all, investing in your team is investing in your business. We're also exploring the importance of having revenue-increasing processes in place to support your employees sustainably. So, let's roll up our sleeves and get into the nitty-gritty of hiring and managing your team efficiently. If you know a fellow business owner wrestling with these issues, share this with them - they'll thank you!

Until next time... Follow on Instagram @buytimepodcast
Follow Jacob K. Mead on all the socials @jacobkmead

Speaker 1:

Hey everybody, this is Jacob K Mead and this is the Buy Time podcast, where we discuss everything there is to know about buying back your time. Be sure to like and follow and share with somebody who needs to buy back their time. Enjoyed today's episode. Welcome back to another episode of the Buy Time podcast. I'm your host, jacob K Mead, and I'm super excited that you're here, because today I want to talk about a very important subject, and that is when is the right time to hire, how do you know when to hire, how do you go about that process and how do you financially put your business in a place that you can support it? Because those are all very good questions and they're questions that I had when I was looking at first hiring my first team member and I'm talking full hires, so W2, not independent contractors, but actually having a payroll system and payroll structure. So let's go ahead and dive into that. So, if you've been working in your business for a while, chances are it might just be you. You've been going at it, you've been doing everything wearing all the different hats, and we always talk about stepping aside and letting your team handle it. So I wanted to take a second and actually talk to you about how to do that. So, before you're actually looking at branching out and getting an employee, you have to ask yourself am I ready? So here's some ways that you can recognize if you're ready to actually get an employee to come on board and help you and I'm talking like, again, w2 employee, not independent contractor. So look at your workload. Are you overworked? Are you having more sales come in than what you can handle? Are you having more clients than you can handle? These are all the questions that you're going to want to be asking yourself, because this is going to tell you whether or not you can actually hire on someone Now, before you start doing the math and, financially speaking, trying to figure out if you can afford someone, it's also important to remember that along with payroll comes a lot of taxes associated to that. So you're going to have your unemployment tax. If you off your employees health benefits, you'll have that as an expense, and so it's important, whenever you're looking at an employee, to make sure that you're factoring all those additional expenses. And so there is one great application out there that I use for this, and it is actually called Gusto. They do an excellent job of helping you with benefits, payroll, hr, really anything that you need to be able to run a business with employees. They have time clocks on there, they have reporting systems everything that you can possibly need in order to have employees they actually offer, and so I would recommend starting there and at least getting an idea of what it's going to run you monthly, and they even give you cost analysis and like estimates of what it would be to have an additional employee with all the benefits that you offer. Now let's talk about employee compensation and why you want to make sure that you're the one providing the most amount of compensation compared to your competitors. One thing I find a lot of business owners do is they're always looking for the cheapest. They're looking for the employee that can come in and work for the cheapest. They don't want to pay because they want to be able to keep more revenue in the business, which we all do, right, I mean, revenue is kind of what makes the business survive, so you need it, but what really makes the business survive and really lets you be able to start that process of buying back your time and stepping outside your business is having a quality team, having a team that you can trust, and so what I like to do, and I pride myself in, is making sure that I am paying my team the highest in the industry across every little platform there is, and so the best benefits. I make sure that my team has everything they possibly need to thrive and succeed in my business. Now, does that cost me? Yeah, it does. Does it get into my revenue? Absolutely, but you'll see that it comes back to 10-fold in other ways. You'll see that your team feels empowered. You'll feel that your team feels valued. You'll feel that you are actually providing a good livelihood for your employees and that makes you feel good on top of it. So don't look at, okay, how little can I pay these employees, or what can I get an employee for, if it's truly someone that you know is going to grow with your team and actually be there for your business success. Make sure that you're compensating them well and be the best at it. Offer them the highest compensation package compared to anyone else in your industry. You'll see it makes a huge difference. So that's more from the financial side. Now you will notice that Payroll does eat up a lot of your revenue, and so it's important that you're looking at that before you go and hire someone, because a lot of the times what I see is business owners they get super busy, their workload's tied down, and then they go and they hire someone and that kind of free ups their workload, but then a couple months go by, six months, eight months, and they're having to let go of that employee because they can no longer afford them. And that's a hard place to be, because you've got to look at your finances. You've got to say, hey, listen, if I'm going to bring this employee on, I'm going to pay them. You know $10 an hour. You got to make sure you're telling yourself that, hey, if I want to pay them $10 an hour, that's really $15 an hour. Now, we know $10 an hour isn't very much, I'm just using that as an example. But let's say you're paying them $10 an hour, I always say add.5 to that, so that'll be $15 an hour. That's what all of your taxes and everything in there, so you can financially prepare for that expense. So make sure that you have your processes in place in order to increase that revenue and make sure that you can afford that employee, especially on your slow times too, because you're going to have slow times where maybe you're not as busy, but you're still going to have to be able to pay for that employee. So you need to make sure that you have enough revenue coming in that you can actually pay for that employee. So definitely have a plan in place as far as okay, these are my slow months. And maybe those slow months you could have the conversation with your employee that says, hey, during our slow months I'm going to have you only working 30 hours versus 40 hours, but make sure that you're having this conversation ahead of time. I think the biggest thing employees hate is being surprised by something. So they come in, you're told yes, I really need you. I'm going to give you 40 hours a week. And then three months go by and you get slow and now they're down to 30 hours a week. That's a shocking surprise. They're not expecting that. Now their finances are all blown into proportions. So make sure that you're setting clear expectations with your employees about how many hours they're going to get, the benefits they're going to get and what you're going to provide for them. Now let's talk about managing employees, training employees, because that all comes into play when you get your first employee. So your first employee should be the person that you feel will take the best mentorship from you. They're going to be your right hand person and they're going to be there to help grow the business. They're going to be there when the business is going through troubles because they have faith in you, they have faith in the process, they have faith in the business. Now, finding this person isn't easy. It's actually can be quite challenging. So you're going to go through interviews after interviews and you may even make the wrong hire at first. But listen, that's okay, I've been there, I've done it. You can overcome that. If that does happen, but make sure that you're hiring someone that sees the full potential of the business. That's not necessarily there just for the paycheck, but it's there because of the vision. That's just as important as anything else any skillset, anything like that, that they may be bringing to the table. It's important that they see the full vision, and so make sure you're asking those questions in the interview. What does it look like in five years? Where do you want to see yourself in this company in five years? I've actually had some people that have bombed that question and it's like well, if you're not interested in being with me or even somewhat having a vision. Yes, I understand things can change, but if you can't picture yourself in the company and working in the company and being there, then I don't want you because you're not part of the vision. And I'm all about a really good work-life balance, really good work culture, and that is almost poisoning the well when you bring someone in that doesn't see your full vision. So if they're your first employee, make sure that they're seeing your vision and that you're able to mentor them, because they're going to be the person that's going to help run the place while you step aside. They're going to be the person that helps mentor other employees that you bring on. So it's very important that you get that first hire tuned in and then that you also have good structures and good systems in place. Now I'm not going to talk too much about this either, but when you start to bring employees in, it's very good that your business has SOPs and that is basically to, for your employee knows exactly what they need to do and it's basically an action plan that says, hey, if this comes up, this is what you have to do in order to resolve it. So it's super important, something that you want to make sure that you have, especially when you're bringing on employees, it's almost needed, and so don't forget to have those Now. Once you get that first employee and you're going to have this happen they're going to make a mistake. It's important when they make that mistake that you're letting them know that it's all right, that you understand. Now. I know this sounds simple, but I've seen business owners almost harass and belittle and get upset with their employee because they made a large mistake that cost them lots of money, and they're told that over and over. Well, they're going to make mistakes and they're going to make mistakes that will cost you money. So realize that, going into it, that they are going to make mistakes that cost you lots of money. Let that sink in because it's going to happen, and once you realize that's going to happen, it's a little easier to deal with it when it does happen. I always look at my employees like myself. What would I want someone to tell me if I made a mistake? How would I want someone to treat me if I messed up? How can I resolve the situation at hand so it doesn't happen again? And that's when you're going to offer a coaching. You're going to be able to coach them through what they could have done, the scenario of how it happened, and get them to a place where they feel confident that if something like that were to arise again, that you're not going to lose out on that sale, you're not going to lose a financial value from it. So take any breath. When your employees make a mistake, know that they're human and understand that mistakes do happen. But that's part of the learning process, especially your first employee. It's part of the learning process and understanding, like hey, they're learning with the business, they're growing with the business. They're learning your operations, they're learning your standard operating procedures, which is what an SOP is. So they're learning all of those along with you. And that's what you want. You want your proto-J Pretty much. You want to be mentoring your proto-J so that way they can help run the business while you step away and work on the business. And if that's your plan, like, let's say, that's your plan is to get someone in there that can work for you while you work on the business and you're not constantly doing all the sales, if that's your plan, make sure it's clear. Make sure it's clear and that they have an understanding like, hey, listen, they need to come at the mindset of like they need to learn as much as they can about the business, because you're going to be the one running the business, versus working in the business. So I guess one of my questions for everyone out there is have you hired an employee? And, if you have, what was your biggest mistake? I'd actually love to hear that, because I want to see if some of our mistakes line up. Thank you, and you can just leave a message either on my Facebook or Instagram page at JacobKMead. Go on there, leave me a message, or send me a message or leave a comment. I'm just very curious as to what was the biggest mistake you made when you hired an employee. And if you haven't hired an employee, why haven't you? Is it because your sales aren't where they're supposed to be? Is it because you feel like you need to control every aspect of the business? Is it because you don't know how to go about doing that? Is it because you're afraid of committing to an employee? Why is it that you haven't hired your first employee? I'm also curious to know that as well, and maybe we can work together on finding a solution that works best for you. Well, hopefully, this gave you some insight on hiring and the importance of hiring because it really does start with your team in order to get your time back. It's something that I absolutely value as my team, and I will do everything I can for them, and sometimes that includes not paying myself, because my team means the most to me and they always deserve the best. My name is Jacob K Mead, and if today's episode really helped you and you think it could help someone else, please share it with somebody that needs to hear this message and let's make sure that we're getting our time back Until next time. Thanks for listening to today's episode. My name is Jacob K Mead, and until next time.

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