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How to Decide When to Hire an Employee

Your business is up and running, and you're busier than ever. Should you hire someone to help out?

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Q: My business is starting to generate more work than I can handle. I'm thinking it's time to hire employees, but I'm concerned about the expense. How do I figure out if hiring makes sense financially?

A: Before you even think about hiring your first employees, you need to know what they're going to cost you. Salaries and benefits are the obvious costs of having employees, and they're the most important ones. But they're hardly the only ones. In addition to the ongoing costs of having employees, you'll have to budget for some or all of the following one-time costs of hiring them:

  • Paid advertising (print or online) to attract job applicants
  • Your time to screen, sort and file incoming resumes and applications
  • Time or money (if you use an outside service) to conduct background checks on potential employees
  • More of your time and money to conduct interviews
  • Training to get your new employees up to speed
  • Lost productivity resulting from new employees who don't work out
  • Fees for executive search consultants, recruiters or staffing agencies

It's likely you won't have to pay all these costs for every employee you hire. But as you continue to add staff, you may face many of them sooner or later. Budgeting for them now can help you make a realistic assessment of the costs of growth.

Remember, the traditional full-time employee isn't your only hiring option. In fact, more and more companies are turning to alternative arrangements, including hiring temporary employees, part-timers, interns and leased employees. Or you might consider hiring interns. These are usually students who work for minimum wage for the opportunity to learn your business. Interns can often be found through local high schools or colleges. Call the school and explain your needs (job description, hours, skills required) or post the internship online, for example on Often schools offer their students credit for job experience. Sometimes interns work for free, but the laws vary state-by-state, so make sure you're in compliance with your state's regulations.

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