When to hire your first employee
Have you reached the point where you can't keep up with the demands of your business, alone? It may be time to hire staff, or at least get some help.
1. How to know you've reached your capacity
When your business succeeds, you're soon going to hit your personal capacity. No matter how hard you work, or how many hours you spend on your business, there's only so much you can do on your own. At this point, you'll need to bring on some people to help. The question is - what will they do? And what sort of employee do you need? To sense check whether you're ready to take on staff, ask yourself the following questions.
2. How many hours a week will you need the person?
Your new person might not need to be full time. Part time, casual and contracting are all options that can be more cost-effective, depending on the workload and type of work.
3. What experience level do you want?
When you're deciding on what sort of person you want, think about their seniority. The more experience someone has, the sooner they'll be a productive team member. The difference comes down to long term costs, and what you want the person to bring to your business.
4. Total cost of employment
Employees can be a significant expense to the business. It's important to work out their total cost of employment, so you can be sure your new employee will add to your total profit.
Employment costs may include some of the following:
- Their salary or wages
- Your contributions to their KiwiSaver fund - at least 3% of their gross pay
- ACC premiums
- Additional insurance - talk to your broker to check your policy details
- Equipment required for the job - computers, vehicles, uniforms
- Recruitment
- Training
- Contribution to use of their assets, such as a vehicle or their phone usage
This business.govt.nz calculator can help work out your total cost of employment.
5. Business potential
When you're on your own, your business is all about you achieving results through your own efforts. With an employee, your business changes and it becomes all about achieving results through others.
That can be a challenge for business owners used to working solo, but without people, your business will only ever be as big as you.
Your employees can help expand your offering, and bring in more revenue and more customers. Over time, you can grow to the point where you can even step away from your business for a week or two and know your team will be running it efficiently for you until you return – and that's a great feeling.
Keep reading
What's next for your business?
Small business banking
Every business is different and has unique banking needs, discover your options.
This page is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and should not be relied on. This information has been prepared without considering your objectives, financial situation or needs. We recommend you seek independent professional advice and contact Inland Revenue before acting on this information.
