If you’re at the stage where you’re consider hiring, it’s a sure sign that your business is moving in the right direction. Even if profits haven’t reflected success thus far, you can be sure they soon will. So, pat yourself on the back before moving forward. You’ve made it further than a lot of startups. Many never even get far enough to see employment in the near-distance.
But, for the time being, the celebration stops there. Now, it’s time for some serious thinking. Many business owners think that, as long as they can afford a decent wage, they’ll be okay to embark on the employment journey. But, it isn’t always that simple.
No matter what way you look at it, there’s a myriad of hidden costs when it comes to employment. Wages are one thing, but they’re far from the only expense you’ll come across. As such, it may be best to wait a little longer. Saving up now will ensure you can cover all costs in the future.
Of course, business doesn’t often wait for anyone. If your company is growing at too fast a rate, it’s worth looking at alternative options, like small business loans. While borrowing is far from ideal, the pace of your business growth is a sure sign that you’ll be able to pay the money back. Some would argue it’s a no-brainer.
But, getting the money isn’t the only step you need to take. You also need to ensure it lasts by financing for every stage of your employment journey. And, to help you do it, we’re going to look at the costs you might not have factored.
Let’s start with the obvious one. No one attempts to employ staff before they can pay wages. That would be madness. But, estimating what you’ll pay out may not be as straightforward as you think. For one, you need to make sure you’re offering a competitive wage. In many ways, the applicants hold all the power in the job stakes. If you want to find the right professionals to help your business, you’re going to need to offer wages which appeal.
You may have thought you could get away with minimum wage, but that won’t attract the individuals you’re after. To get an idea of the wages you should be offering, look at job listings for similar positions, and work out whether you could beat them. If not, this may not be your time to shine.
Amount aside; you also need to consider how many wages you’ll need to pay out for smooth operation. It’s unlikely that you’ll be able to hire an all-round employee. Instead, you may find that you need to hire a team to meet increased demand. As such, you’re sure to be paying out for more than one wage packet. Reconsider your finances to judge whether you could afford it.
The cost of advertising
Before you can even think about wages, though, it’s time to tackle the cost of advertising. To be in with the best chance of finding your dream employee, you’ll need to advertise in as many places as possible. And, you can be sure that it won’t be cheap.
Your first port of call for placing a listing should be online. This is where you stand to reach the most people. The good news with online advertising is that you generally pay per click. Be careful though; rates can span anywhere from $0.10-$5 per click. If you’re at the top end, you’ll be paying big. To keep costs down, try to limit the amount of time your listing is up. The best method may be to take it down when you get to 50 applicants. You never know, it could happen in a day!
You’ll also want to advertise elsewhere, perhaps in shops, or in relevant magazines. Again, keeping cost down here is quite simple. Limit your options to one or two, instead of paying for every option you think of. You can still guarantee you’ll find someone, but it’ll cost you a lot less to do so.
The time it takes to interview
We’re still on the application process, and there’s yet another cost to consider. As it stands, your time is your money. You are the only person running your business. Hence, any time you take out is profit lost. If you’re interviewing ten applicants, and each slot takes half an hour, that’s a whopping five hours of business lost. That’s nearly a whole trading day! So, you need to factor that lost money into your search.
Spreading the interviews over many days may be one way around the problem. At least then you can still work for the rest of the day. But, the time lost will still be the same. Another option could be to entrust your business to a family member or friend during that time. This does, however, bring risks. If they aren’t used to the running of the company, they could make mistakes which end up costing you even more. For the most part, the best thing you can do is account for the loss, and move forward with that estimate in mind.
You’ll also need to consider paying your colleagues overtime. Not every job will be completed in the standard 9-5. And, if you have a good team behind you, they won’t mind staying late to get things finished. But, they won’t do it for free, and nor should they have to. As such, you’ll need to have some money set aside for these eventualities.
This only applies, of course, if you pay an hourly rate. Those on a salary won’t expect extra money for extra hours because they’re paid for the job, not for how long it takes. You may think, then, that you can skip the issue by changing the way you pay. But, you might want to think again. For the most part, hourly pay rates are a cheaper way forward. They ensure you can be more flexible about what you pay, and even give you the chance to change shifts if you’re struggling. On a salary, things aren’t so easy to shuffle. The best thing you can do, then, is keep some money aside.
The right conditions
You don’t need us to tell you that there are strict laws about conditions for employees. If you don’t stick to health and safety standards, you’ll lose staff, and potentially face penalties. So, as well as needing to pay for your team, you need to afford a space which meets the correct regulations. If you thought your staff could join you in that shed in your garden, think again. You need to provide a valid workplace with windows, proper ventilation, and an acceptable level of hygiene.
On the one hand, you could view this as a chance to expand. The larger your business gets, the more space it’ll need. So, why not start expanding now? It’s as good as a time as any and ensures your staff will stay happy. But, there’s no getting around the fact that it’ll cost you. The good news is, many commercial spaces are rentals, rather than owned. So, as long as you can afford the monthly payments, you should be okay. You certainly won’t have to worry about making enough money to buy a property outright. But, rental isn’t always plain sailing. You’ll lose a large sum of your profit to the cause each month. And, when profits are uncertain to start with, that’s far from ideal. Sadly, there are no quick fixes for this one. Bet that loan’s looking a little more appealing now isn’t it? The good news is, with help from companies like Unsecured Finance, you can get a loan on the same day as you apply. So, there’s no reason why a suitable space has to stay out of your reach for long. That is if you’re willing to take the risk.
And, of course; you also need to consider the incentives which will keep your workforce happy. In many ways, these go hand in hand with offering a competitive wage. While they aren’t an essential part of employment, they are crucial if you want to attract quality staff. Why would they come and work for you if they could settle with a company who offers much more?
Incentives you need to consider vary, but health insurance and pension payments should be top of the list. The majority of quality employers now offer both, and not doing the same will set you back in a significant way. On top of that, a monthly bonus for the top employee is sure to encourage staff to work as hard as possible. But, over time, that extra cost will start to add up. If you don’t account for it from day one, you could soon find yourself in hot water. So, add that to the list, and consider whether you are in a position to employ after all.