You need to hire more team members, but how do you grow your team without breaking the bank? In this post, we’ll explain three things you can do to help ensure you maintain profitability as you grow.
Make sure you read our last blog post, where we discussed how to evaluate your team’s capacity and utilization!
Understand Roles and Responsibilities
One of the best pieces of advice we can give you regarding hiring is to have a clear understanding of the roles and responsibilities of each team member. You don’t want to hire just anyone without first knowing what you need support with. After doing a team evaluation, you should have more clarity around this.
Then, decide on the type of role that needs to be filled, whether it’s an administrative role, a client-facing position or someone in management. Doing this first is important because each role requires a different level of experience and expertise – meaning, their pay rates and compensation will also differ.
Next, ask questions to find the right person to fill this job:
Do you need someone with a lot of experience that will require a hiring pay rate? Or is this an entry-level, day-to-day sort of role needing to be filled?
This process will help you make a plan for hiring your next team member and give you more confidence in your decision.
Avoid Overhiring
Something that we advise many of our clients to do is to not just immediately hire another full-time person because this leads very quickly to overhiring.
For example, if you need more support than your current team can give you, but you also don’t have enough cash flow to pay another full-time person, it may not be the best idea to go and hire a full-time person. In many cases, it is helpful to look for a part-time team member or contractor (where appropriate) to fill that gap for now. Then, when you build that part-time team member up to 75 to 80 percent capacity, you can assess whether it’s more cost effective to transition that role to full time.
In this way, you can switch your mindset to getting incremental support as you bring on more clients, so you still make more money every time you bring on a new client and you’re only paying for support that’s used for client work.
The goal is to keep your team relatively lean and maintain flexibility as much as you can while still having the right amount of support.
Increasing Retention Rates
Hiring new team members can be simple when you know what you’re looking for. Keeping them around, however, isn’t always so simple. Of course, you want to pay people well, especially the team members who you want to retain.
For the more expensive roles, especially in agencies and other service-based businesses where your biggest asset is people, a lot of business owners want to go with lower-cost, lower-level team members because they’re cheaper. Sometimes, though, you do truly need somebody who can step in and play a bigger role.
Our philosophy is that your team is usually worth paying a bit over market for because they’ll do a better job, they’ll be more independent, your clients will be happier and stay longer, and your team will be happier and in turn, they’ll stick around longer. We all know hiring and training is expensive, and you also want to prioritize having a team that builds relationships with your clients rather than having team members that go through a revolving door.
Working with a CFO to Know When to Hire
From a CFO perspective, we help understand your profitability so you have the clarity you need around when and if you should hire as you scale your business. We’ll also work with you to create a financial plan and work through things like team size and compensation to build a plan for improving your profits.
It’s better to be proactive than to watch your bank account slowly drain – a CFO can identify issues ahead of time so you avoid racking up serious debt or deciding to burn your business to the ground.
Make Payroll Fun Again
It is possible to have a full team of support that doesn’t require you to dip into your own profits. From one employee working on the backend to an agency of 10 or more team players, optimizing performance will positively impact your profitability. And knowing how to do that gives you peace of mind each time payday rolls around.
At Young and Co, we proactively work with you to uncover the gaps in your team’s performance so you can increase utilization, make confident decisions around hiring and create an overall plan to scale your business without over-hiring or overpaying. Fill out our Financial Assessment Questionnaire to get in touch with our CFO team today!
Young and Co empowers service-based business owners to make an impact in their world through strategic financial services. Let us be your partner in understanding how to confidently handle growth in your business. Together, we’ll build a strategic plan that sets you up for long-term financial success. Learn more about our service tiers and how we can support you in your business endeavors by visiting our website today!
Looking for the next step? Fill out our Financial Assessment Questionnaire to learn more.
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