Budgeting To Hire: Are You Ready?



So, you think you’re ready to hire someone to help you in your business. You’ve done some schedule and project planning, as suggested in this article, but there’s another important question to ask yourself before you write that job description and make the big move: can you really afford to hire someone?

To figure that out it’s best to create a separate hiring budget, and into that hiring budget you must build some wiggle room. Why? Well, hiring can be tricky, and you never know exactly how much it’s going to cost. For example, you must take into account that not every hire is going to be perfect, which means you need to be prepared to make an investment in this process. Sometimes you’ll get lucky and find the right person the first or second time, but often it will take more than that, and you have to be able to absorb that investment.

Other things to consider are costs that will be associated with growing your team. For example, you may have to purchase additional equipment, marketing materials, uniforms, office supplies or software licences for them, or you may have to upgrade from free tools to paid packages to cover additional users. All of these things add up, so it’s important to consider all the angles and account for all additional costs you may incur when expanding your team.

When you are budgeting to hire, I want to caution you against planning to pay the person you are hiring from the money you’re expecting from the project they will be working on.  Timing doesn’t always work that way in a business. When you’re onboarding and training someone, for the first few weeks they are going to be an expense, and you need to build that into your hiring budget.

Aside from figuring out if you can afford to hire someone, you want to also really do your homework on whether this new position will pay off for your business. That means doing a proper analysis and confirming that this is actually an opportunity for your business. Are you bringing this person on because they will have a direct revenue impact? Or maybe they can help you seize opportunities that can be linked to revenue? Perhaps you are hiring them to help you find ways you can save on resources? Or maybe you’re looking for someone who can help you save time because they have a skill that you don’t. Whatever the case, be sure to take a specific, concrete look at whether this hire will pay off for your business, and have a clear image in your head of what that looks like.

Now, before we move on from budgeting, I want to provide a few tips about staying within your budget while you are building a team. My first piece of advice is to set weekly limits. If you’re going to pay people on an hourly basis, it’s a good idea to give everyone a set number of hours to work to make sure you don’t go over-budget. Ask them to let you know if it looks like the task they have been assigned is going to take longer than anticipated in any given week so you can make adjustments as needed. This will not only help you stay on budget, but also puts a guideline in place for your freelancers or employees so they know how to manage their time.

Another good practice is putting together a specific budget for a specific project. If you sit down and figure out how many hours a given job is going to take, and how much you are going to be paying someone, you will be able to figure out what the project investment will be. You can share that information with the person/people you are hiring, so they know what is expected of them.  Some people might complete their work faster than you estimate, and obviously that will work in their favor. Some people will be right on target, and others might spill over a little bit. But if you let them know the budget up front, they will have a better feel for how they need to manage that project.

To help you keep track of what is going on, check in with them regularly. For example, each week my team members send me a note letting me know what progress they’ve made, and where they are in the project(s) they are working on. I may communicate with each of them at different times in addition to that, but that check-in is a minimum. We do this with a tool I’ve mentioned before: Slack, but if you don’t use Slack you can do it via e-mail. This really is an invaluable practice in terms of understanding the productivity of the people who are working for you, and it will help you to budget more accurately and work more efficiently in the long run.

Take Action

When you’ve created your hiring budget, go through this checklist to make sure you’ve got everything covered.

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