6 Min. Read

When To Hire New Employees: Smart Tips for Growing Your Small Business

June 6, 2024

It’s important that small businesses get the timing right when hiring new employees. If an employer hires someone too soon, profits can decline and cash flow can dry up. But if employers wait too long to bring on a new worker, your commitments can outpace your capacity, so unfinished work starts piling up. You should hire new employees when there’s enough work to demand additional help and your financial situation is stable enough to manage the additional cost of a new employee. You should also consider the hidden cost of hiring new employees, including health insurance coverage, training program costs and more. It’s important to hire new employees before you reach a workforce crisis, since it usually takes eight to ten weeks to hire someone, and even longer to properly train them.

These topics will explain when to hire new employees and how to manage the hiring process:

When Should Businesses Hire New Employees?

How Do You Know When to Hire Additional Staff?

Why Hire New Staff?

When Should Businesses Hire New Employees?

Businesses should hire new employees when doing so is financially feasible and there is enough additional work to warrant taking on a new employee. These five factors can help you decide when your small business needs to hire new employees:

Strong Growth

If you’re considering bringing on new employees, the first thing to do is to take a look at your business’s financial reporting. In particular, examine your company’s revenue and see how it has changed over time. If your business has been steadily growing its revenue over the course of several months, that’s a good sign that your current employees are working efficiently to drive strong growth. This could suggest that in order to continue the pace of growth, you need to scale up your business by hiring new workers.

Limited Employee Capacity

Next, take a look at the capacity of your current employees to evaluate whether it’s time to hire more support. The best way to understand your employees’ current capacity is to speak with them directly, or talk with managers who oversee the workflow of employees. If employees are unable to take on new work or, worse, struggling to manage their current workload, it may signal that you need to create a new job position to keep growing your business.

Overtime Increases

In addition to speaking with employees to better understand their capacity for new work, you can analyze data for clues that your workforce needs to expand. Take a look at how much overtime your employees are clocking and how that number has changed over the span of several months. If employees need to work overtime more frequently to handle their workload, that’s a good indicator that it might be more cost efficient in the long run to hire more staff. You can also take into consideration employee morale: if working overtime is leading to more burnout and fatigue among workers, hiring new employees can help your business continue to grow in a way that’s sustainable for you and your staff.

New Opportunities Arise

If your business has the opportunity to offer new services and products to your clients, there’s a good chance you’ll need to hire new staff to accommodate the expansion of your business. If your company is already busy with current business responsibilities, you’ll need to take on more employees to help with the increased workload of expanding your product and service offerings for customers.

New Skills Are Needed

If your business is expanding to offer new services in order to grow, you should look at the skills and experiences of your current employees. If your new business offerings require a skill set that is lacking in your current staff, you’ll need to hire new workers who are experts in that area, even if you’ve determined your workers may have the capacity to take on new work.

How Do You Know When to Hire Additional Staff?

Sometimes, changes to your business operations can signal that you need to hire new staff as soon as possible to keep your business from suffering. Here are some common signs that your business requires additional staff right away:

You Have to Decline New Work

If you have a steady roster of clients that you’re doing solid work for, but you need to turn down new opportunities to work with prospective clients, that’s a sign that you’re understaffed. In order to take on new clients and do more work, you’ll likely need to recruit new hires to help manage the increased workload.

Your Employees Are Overwhelmed and Overworked

If morale is low within your business, with high employee turnover, increased sick leave and more complaints from workers, that probably means you need to hire new workers to lower your employees’ stress levels and make sure they aren’t working too hard. Employee retention is important if you want to expand your business and offer top-quality service, so make sure you keep your employees happy and healthy.

Customer Service Suffers

If your employees are stretched to capacity on the job, there’s a good chance that your turnaround times for submitting work to clients is slowing down and the quality of work you deliver might even be suffering. If you receive more client complaints about delayed service or lower-quality service, you should hire new employees to help get the work completed promptly while maintaining a high quality.

Revenue Stagnates

If your revenue growth slows down or stops, it could be because the departments that drive the greatest amount of revenue have reached their capacity. Determine which areas of the business have the biggest impact on your revenue growth and consider expanding that team in order to kickstart your earnings. If you want to learn more about different ways to increase your revenue, check out our post on How to Increase Revenue. It provides simple methods along with tips to boost revenue from existing clients.

Experienced Employees Cover Basic Tasks

Take a look at the responsibilities of your workers. If you see that some of your most experienced, high-paying employees are spending a lot of valuable time on menial administrative tasks, you should consider hiring junior employees within those departments to help manage the workload. That way, your junior hires can spend time on basic tasks and free up your senior employees to focus on top-level projects that have a greater impact on the overall health of your business.

Why Hire New Staff?

If your business has reached its capacity to take on new work and you’re experiencing strong revenue growth, hiring new staff can bring many benefits to your workplace. Here are some of the top advantages of hiring new staff:

Improve employee morale and mental health
Bring new ideas to your company
Increase the skill set of your workforce
Build your capacity for new work
Grow your revenue