When you have new business opportunities just around the corner, you have a “chicken or egg” decision to make. Should you hire staff in anticipation of the potential growth or contracts, or should you wait to hire new team members until the deals are actually signed?
This can be a tough choice to make, and many business owners find themselves wondering whether they should invest the money ahead of time so they have a fully trained staff when the opportunities come in or opt for the seemingly low-risk approach and wait for the new surge of income.
Here are several things to consider when deciding when you should hire new staff.
Your Budget and Cash Flow
Your budget will be a significant deciding factor in whether you hire staff ahead of a big contract or after the fact. The reality is, cash flow concerns can have a major impact on the success of a business. And with 22% of small businesses getting their entire capital from personal or family savings, according to the Small Business Administration, there may not be a lot of room for risky financial choices.
As a result, some businesses may not have the financial flexibility to hire new staff before a deal is closed or new profit comes in. You can always look at financing options, like small business loans that cover your payroll expenses if you’re really in a pinch, but waiting until you’re more financially secure will be the safest bet.
Your Current and Expected Workflow
While deciding when to hire new team members to cover an expected increase in work, it’s essential to consider what your team is currently capable of handling. If you were to sign a new contract, would your current team have the ability to keep things running smoothly while you found new and qualified staff to join? And would they be able to handle it while you take the time to onboard new employees?
While it varies heavily based on the industry and job position, a study from LinkedIn showed that it takes somewhere between 33 and 49 days for new employees to be hired once the process begins. Onboarding can then take anywhere from a minimum of three months up to a full year.
That being said, some industries, particularly those that were hit early and hard by the coronavirus pandemic, are in dire need of staff, so you may find yourself wanting to beef up your team before flooding your current employees with extra work.
There are some instances when businesses reliably know they’ll need more staff. A popular e-commerce store, for example, could predict a need for more customer support and warehouse team members leading up to a holiday, based on their past sales.
When it comes to bidding on a contract, though, there’s significantly more unpredictability. Here are a few things that you should keep in mind:
- If the contract is accepted, how long will it take for you to find, hire and train qualified staff? Will your new team be ready to work when it’s time for the contract to start? If you have a contract with a long lead time, you have a better chance of being able to hire after you’ve been awarded the contract.
- Does the contract require special certifications or training for your team members? Some government contracts may require that any team member involved with a project has specialized certifications, training, or clearance. If specialized training is needed, you’d likely need to hire the team ahead of time in anticipation of the work. Some federal contracts, for example, require that any employees who are working on the contract have access to sensitive information privacy training.
- Does the contract require your team to be of a certain size? If you want to compete for a small business contract, you need to be under a certain size. This may factor into whether or not you want to hire additional staff at all, and it does vary by industry.
The Roles You Need To Fill
The roles you’re looking to fill can have a huge impact on whether you hire in anticipation of new business or after it’s already been secured.
It’s often much easier to find someone to help with administrative work, for example, than it is to hire an employee with a niche or unique skill set. LinkedIn’s study showed that it takes an average of 33 days to hire an administrative assistant, but an average of 49 days to hire an engineer — and that number can increase quickly if the job is highly specialized.You might be able to find another role for someone with generalized skills if a specific contract doesn’t pan out. On the other hand, hiring for a more specialized position could mean having to let the person go or taking a financial loss until you can secure other business opportunities or contracts.