How To Know If You Can Afford To Hire Someone

Let’s face it—if you own and run a small eCommerce or Online Business, you can always use a little extra help. Small business owners who find themselves confronting a gap in the operations chain, or are simply exhausted from running the show themselves, often fall into one of two camps.

Camp #1 downs a strong cup of coffee and soldiers on, unwilling to part with a dime of their hard-earned money to hire some outside help. Time enough for that when the business is making millions.

Camp #2 instantly begins crafting a Craigslist “help wanted” post, or starts asking friends and family if they know anyone who wants to make a little extra money.

No matter which camp you fall into, it’s vital to stop and take a few minutes to create a strategy. Hiring outside help for your eCommerce or Online Business is more than just how many hands you can get involved (or do without) in running your business.

One of the best in the recruiting space for online entrepreneurs is Rikka Brandon, known around the WWW as the expert on hiring strategy. In her words, “The unfortunate reality is many entrepreneurs hire before they are truly ready.”

Hiring before you’re ready can spell disaster for an eCommerce or Online Business owner.

It can drain both your finances and your energy, not to mention wreak havoc on your long-term vision. Perhaps worst of all, a bad hire can take all the fun out of owning and running your online business.

But that isn’t to say that Camp #1 is right, and you should never, ever hire.

We’ve worked with plenty of small business owners whose businesses were crying out for them to hire outside help. These people saw their businesses struggling, but didn’t know how to read the signs.

So how do you know if you and your business are ready to hire? And how do you create a solid strategy around making the investment pay off? 

We’re glad you asked! 🙂

How to Think About Hiring

Instead of hiring an extra pair of hands to enter data, think bigger. Look at your business as a whole and ask if you’re accomplishing everything you set out to do.

If yes, the funds you could spend to hire are better spent elsewhere.

But if no, hiring is a cost-savvy decision that will allow you, the business owner, to spend the time needed to grow and develop your business.

If you’re the type of eCommerce or Online Business owner who starts hiring interviews by saying, “Now, I can’t afford to pay much,” this advice is for you.

The cost of hiring isn’t just about the dollars in your new employee’s paycheck.

It’s about the time, effort and energy that you spend on training that person, managing them, and evaluating their performance.

You need to be confident that investment will pay off in profits and growth for your business. Otherwise, your hire is a huge financial waste.

So…. as you think about whether you can afford to hire, make sure you’re not making some of the big financial mistakes that small business owners commonly make when it comes to hiring:

  • Not creating a financial plan or budget to sustain the employee.

The cost of hiring and training someone is a huge time commitment. If you don't have the finances/budget in place to keep the employee long-term, then it may not be worth the time investment to train them.

  • Not truly vetting the position or the person you are hiring for.

Hiring the wrong person is costly.  eCommerce and Online Business owners really need to map out the skills needed for the open position. Watch as many HR type resources you can find on hiring and what questions to ask. Do not take this process lightly.

  • Try to steer clear of hiring close friends or relatives, especially during the growth stages.

You may feel like you are doing someone a favor because they need a job. Or maybe you’re relieved that they're willing to work for less to help you out. But there are a million things that could go wrong in this scenario.

> Does this hire truly have the skills to perform the job that you need them to do?

> Will you be able to have crucial conversations with them regularly?

> Are you comfortable managing them, and will they respond appropriately?

Clarity and Reality

Rikka Brandon has a great book and course called Hire Power that basically trains online entrepreneurs on how to recruit and hire. Two of her big guiding principles are “Clarity and Reality”—these, she says, are the foundation of a successful hire.

Clarity is all about figuring out what you can afford to pay someone else.

No matter how badly you feel that you need help, cutting into your own salary or profits in order to hire is a huge mistake.

Reality is about what you need.

Too many eCommerce and Online Business owners try to mold a job description to fit the best candidate who applied. No matter how great someone seems in the interview, your business’ true needs have to come first.

“But What If I Need Help Now?”

If you’re stressed out of your mind, it can feel like hiring is the only way out. But as Rikka reminds us, “hiring when you can’t afford it will only make your problems worse.”  Often, the problem isn’t a matter of man (or woman) power, but of good systems in your business.

Doing the work to systematize your operations will free up a tremendous amount of time, energy and even money.

And guess what? It makes it a lot easier to train a new hire once you do bring them in.

It can also help a lot to just start planning for a future hire. Come up with a budget on when you can afford to hire someone.

You can also look into part-time help or virtual assistants to take some of the burdens off your shoulders without investing in a full-time hire right away.

Get creative, ask for advice, and you’ll find a solution to help you in the here-and-now while you plan for the future.  Partnerships are what you’re ultimately trying to build with your hire, so start there, by accessing a trusted Advisor or team of Pros that can guide you.  

Financial Issues to Consider

The cost and benefit of hiring depend somewhat on whether you bring on an employee under a 1099 (i.e., a contractor) or a W2 (employee).

Before you hire, make sure to count the hard costs first!

  • The salary for a Contractor might have to be higher since the individual has to assume paying for their self-employment taxes. A W2 employee might be on a reduced salary, but the company has to pay for the employer's portion of taxes.
  • There are usually some benefits given to W2 employees versus Contractors
  • There are IRS guidelines for who is considered a W2 employee vs a 1099 contractor so small business owners need to make sure they are legally compliant.

The Bottom Line

Hiring can have a tremendous impact on your bottom line – in either direction! If it’s the wrong hire, you’ll know pretty quick.  The tried and true lesson in hiring is “Hire Slow. Fire Fast!”  

When you make and take the time to hire the right person at the right time, you’ll see that impact yield returns beyond your expectations. It’s definitely worth waiting for!

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