Can’t Afford To Hire Someone New? You Need To Look At These Parts Of Your Business

Business Efficiency

Last week we discussed the two boxes you need to tick before you make your next hire. However, before you look to grow the team, you need to ensure your business has the right foundations and processes in place, otherwise growing the team can only make things worse.

When you decide to take a look at your business, there’s two aspects to focus on, firstly, your team and your employee’s productivity and secondly, how your business is currently running.

Your Team

This is your biggest asset, full stop! They are the ones that are going to help you get to where you need to go, they’re going to be there through everything with you. So firstly, you need to make sure you have the right people, whether this be in terms of their cultural fit, or the specific skill set they bring, this is something that no business can afford to get wrong. At the same time, you also need to make sure you have and are hiring the skillets that you actually need. There’s no benefit to hiring a great designer when it’s the infrastructure that’s falling apart.

Now you’ve established you’ve got the right people in the team, you need to make sure that they’re doing the right jobs and that they’re adding value to the business. One of the easiest way to measure this is to calculate your revenue per employee metric.

Revenue per Employee = Total Revenue / Number of Employees

This metric will vary depending on your business type; in businesses that have high-touch models, normally your traditional businesses with physical locations that need staff to manage etc, these will have lower ratios. However, when looking at technology based companies, there is no limit to the leverage that each employee can bring to your business.

What is a good Revenue-per-employee ratio to have?

First step is to see how you’re performing against your competitors. This can be hard for some companies, so some standard benchmarks for those high-touch companies stand at around 2 to 2.5x an employee’s salary. Again, the less hands on your business, the higher this multiple should become for your employees.

The Business

After putting the right people in the right place and ensuring they’re productive, it’s time to look at how your business is currently operating.

As much as possible you should look to do the following;

  • Eliminate
  • Automate
  • Outsource

Eliminate:

Businesses change and evolve over time so it’s important to review your processes and how you go about your business. Over time, some tasks and activities become less important and sometimes unnecessary, so it’s important to stay on top of what’s not adding value, and eliminate as much as possible. Doing this could be met with some resistance from staff at first, but if you communicate the benefits effectively to your staff, you can guide them in the new direction with you.

Automate:

Again, what you can automate will depend on your business type. But one thing in this world is constant, and that’s the evolution of technology, there’s a constantly growing number of apps that are designed to help automate repetitive and mundane tasks. Chances are, if your valuable time is being wasted doing petty tasks over and over again, there’s most likely something out there built to save you time. By automating as many of your businesses time wasting tasks as possible, you are able to put your employees back to the value adding tasks that they were probably hired to do in the first place and make your business more profitable.

Outsource:

Every business has a core mission and exists to serve a purpose. And as a result, every person you hire to join your business  should be doing so to directly help serve this purpose. As such, you should be aiming to outsource as much of your business functions that do not directly contribute to this purpose. Depending on your business, such activities could include;

  • Accounting
  • Bookkeeping
  • Legal
  • HR
  • Recruitment (hello!)
  • Admin
  • Payroll
  • Social media

If you think you need to grow the team but you’ve realised you can’t afford it, hopefully by taking on board what we’ve outlined here, you’ll be able to improve your business’s efficiency to the point where you realise you may not actually need to hire someone else. Or at least free up the cash flow to afford that new team member.

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