The cost of new staff – when to hire the next person

To build a business will eventually mean that you need to hire your first member of staff. To continue to build a business then you’ll need to hire more staff. It is always a catch 22 situation when you want to hire staff as (generally) their cost will come before the income (and profit) increases.

That’s the issue we face as entrepreneurs, there is always a cost, an investment, required to grow our businesses. In this case, it is the cost of new staff and the investment decision is when to hire the next person.

If you’re serious about wanting to grow your business, then expanding your staff is the only way to fulfil your business potential.

When you have a team around you then more work gets done. That is a simple fact.

The key though is not to be team of busy fools and ensure that each member of the team is working towards increasing revenues and/or improving profits.

This is crucial for everyone in the team.

Even those who are admin team members are there to improve profitability.


Because they take away the less important tasks from the more important people and that frees them up to do more of the important stuff.

That is a hard concept to understand, but when you get it as the business owner and stop doing the £10 an hour tasks, then you can work on doing the £50, £100, £500 or £1000+ per hour tasks.

And to get to the £1000+ per hour work that will yield improved profits for you, the business owner, the investor, to extract, then you’ll need to build a bigger, better and stronger team.

Don’t fall into the trap of growing through increased productivity, doing more of the same is a way to grow profitability, but doing more in a different way is the only way to really increase your profits.

Become more proficient first, then increase your productivity.

Yes, building a team may seem daunting, but that is usually because a business owner will see the annual increase in overheads and worry.

How will you make an extra £60,000 profit to cover salaries?

That’s the easier bit really.

If you break down that extra £60k into a monthly target, then it becomes more palatable to be able to generate an extra £5k per month.

Then if you convert that to sales, say if your average sale is £1k, then you’ll only need an extra 5 sales per month to break even on your new staff.

Or if you can edge up your average income to £1,250 per sale, then you’ll only need an extra 4 sales per month.

An extra 4 sales isn’t hard to get now, is it?

Get the right people

It’s tough to find the right people, but that’s your task as the business owner – to seek and find those who will help you make your business better and stronger.

Hire the best people you can¸ even if that costs you a few thousand extra £’s per year rather than simply opting for someone cheaper who will do the job.

You are always investing and talking calculated risks as an entrepreneur and your team is an investment in the most important part of your business.

The key to finding really good people is to hire on attitude and not ability.

You can train people to do a task easily, but you can’t train people to do the right thing for their team members and your customers.

Attitude first, ability second.

It all starts with recruitment and identifying that you don’t need another ‘you’.

What you do need is someone with a skill set that complements how you do things, not what you do.

You need to understand that 1+1 should equal 3, so don’t rush into thinking that you have more important things to.

Spend time assessing what type of person will complement what you do, otherwise you’ll simply end up with the wrong person.

You need to understand that prospective employees need to bring something to your business.

It is your role as the business owner to understand what that something is, then figure out who can deliver that whilst crucially fitting into why you do it.

Always start with why and then you’ll find that new hires fit into the existing team faster and better.