Welcome to the crucial decision-making crossroads of business growth – the question that resonates with many business owners: “When can you afford to hire someone?” 

It’s a question that doesn’t really care about the year on the calendar – it’s always hanging around. But you know what? The answer is usually earlier than you think! And you don’t need a whopping $100,000 sitting in your bank account to make it happen.

The response to this question is often met not with a cheer for getting extra hands on deck but more of a hesitant hum. It seems like the idea of hiring raises some doubts or concerns for many.

I can understand why… hiring ‘quality’ help can come at a six-figure cost, and what if it doesn’t work out?

The ‘do I’ or ‘don’t I’ decision is overwhelming for many business owners, and I see it driving 3 typical scenarios:

  • STALLING: business owners avoid the decision to hire by continuing to work long hours. But the real struggle of trying to keep on top of everything remains.

  • HIRING A JUNIOR: this is a common mistake! Why? Because now you’re already limited time, needs to manage and train up their ‘inexperience’. Rather than be lured into the lower salary because it seems less risky, go for capability in someone experienced. 

  • SEEKING MORE SECURITY: with an aim to be well and truly overloaded with work, before taking what’s seen as ‘the financial plunge’.

Being cautious is cool, but a lot of business owners aren’t keeping tabs on their numbers – you know, having a budget and keeping an eye on the cash flow each month. Plus, plenty of folks were never really shown how to do a simple forecast to figure out the financial what-ifs – like a best-case and worst-case scenario kind of thing. Sound familiar to you too?

We’re here to guide you through figuring out if adding some extra hands to your team fits into your budget. Forget relying solely on gut feelings; it’s time to dive deep into the numbers. Get ready to embrace a smarter, more informed approach to handling your finances.

EXAMPLE:

Imagine you’re in the shoes of many business owners, juggling a workload that’s becoming a bit too much. The thought of bringing in experienced help for a salary of $120,000 might be on your mind.

THE AIM IS TO:

#1 – Let’s neutralise that cost to your business pronto. The trick? Shift your mindset. Break down their expected annual wage into a monthly cost – that’s $10,000. Now, your focus shifts to figuring out how to handle that extra $10,000 each month. It’s way more manageable than staring down a hefty $120,000 figure, isn’t it? As part of the plan, you also want to keep a close eye on their performance right from the start to make sure you’ve got the right person for the job.

HOW TO FORM A FINANCIAL VIEW

Now it’s time to roll up your sleeves and dive into your numbers. Let’s start sketching out a few scenarios, essentially creating forecasts that will help you navigate the financial terrain ahead.

Step 1 – Calculate how many hours of work it takes to recover their $10,000 monthly cost. If, for example, they charge out at $250 per hour, that’s 40 hours per month (or just 10 hours per week) of work.

Step 2 – Evaluate your budget and cash flow to determine if and when you can afford the monthly outlay. Establish your ‘breakeven point,’ aiming to recover their cost and your cash flow deficit ASAP. Typically, this falls around the 3-6 month mark.

Step 3 – Shift your focus to productivity and consider:

  • How many cases you need to take on to cover the $10,000.
  • Can you increase their workload for more output?
  • If you delegate cases to them, what financial opportunities open up with your freed-up time?

Step 4 – Crunch the numbers and explore potential scenarios.

  • Month #1: Let’s say they generate only 5 hours of billables per week. That covers half their cost to you.
  • Month #2: Your cost of $10,000 can now be reduced to $5,000, thanks to new invoicing from Month #1.
  • Month #3: It might only cost you $2k.

By running through these steps and scenarios, you’ll be better equipped to navigate the financial path and optimise the impact of hiring help on your business.

Picture this scenario playing out – you’re crunching the numbers, and suddenly, you start seeing a shift in your comfort levels. The once daunting cost is now transforming into a worthwhile investment right before your eyes. Clear evidence of the positive impact your new hire can have on your business starts to unfold, turning hesitation into confidence and uncertainty into a tangible return on investment. It’s a game-changer that can reshape the way you perceive the financial landscape of your business.

As a best-case 3-month scenario: breaking even is a great result! Remember, their value will flourish with training and confidence. Hiring someone is never a ‘quick fix’.

As a worst-case 3-month scenario: If you discover that they’re not showing signs of building revenue value, then it’s time to investigate potential reasons why. They may not be the right person and it’s so it’s essential to be clear on this ASAP.Numbers really are your mechanism to abolish hesitation and achieve visibility. With visibility comes confidence and control. You might discover that you’ll be in better position to hire your new lawyer in October rather than now. That’s great! Because rather than going by ‘gut’, you’re now letting the numbers in your budget inform your decision.