There comes a point at which every solo entrepreneur with a growing business needs to consider bringing on that first employee. The decision to do so can be a nerve-racking one. What does this have to do with debt factoring? Well, it turns out that factoring your invoices is a lot like hiring.
Both hiring and factoring invoices require you to know your business inside and out. They require you to do a proper risk assessment, evaluate cash flow, and project potential earnings. Finally, both hiring and invoice factoring are employed on an as-needed basis.
With all of that to think about, here’s how you know it’s time to hire that first employee:
Hiring Will Save or Make Money
There is a fundamental rule of business that goes back generations. It says that any new thing a business owner does should either save or make money. It certainly applies to hiring.
If bringing on an employee will save money, then it is clear your current operations are not as efficient as they should be. You are spending too much money to accomplish things an employee could do cheaper. Likewise, if hiring will make the company money, it is evident that your business is growing and you need help.
You Need a Specific Skill Set
It is not uncommon for growing businesses to add products or services that require new skill sets. Lacking a particular skill set yourself leaves you one of three options:
- Learn that skill set
- Hire someone who already has it
- Stop offering that particular product or service.
The last option runs contrary to the goal of business growth. The first option will work but learning the skill set will only gain you a temporary reprieve. The best way to go, as long as a new employee will make or save money, is to hire for that skill set.
You Can No Longer Keep Up with Demand
If we had to choose the most common reason small businesses hire that first employee, it would probably be the inability to keep up with demand. In other words, you are running yourself ragged trying to service all your customers. You couldn’t possibly take on more even though the opportunities to do so keep presenting themselves. If you cannot keep up, it might be time to consider hiring.
Avoid Common Hiring Mistakes
Just as with invoice factoring, there are ways to get in trouble when you hire. The risks are higher with that first employee, especially if this is the first business you’ve hired for. Here are some common hiring mistakes to avoid:
- Hiring out of desperation
- Hiring the first person who comes along
- Hiring without first clearly defining the job
- Not interviewing multiple candidates
- Focusing only on education and skills.
Hiring out of desperation is dangerous because it encourages you to pick the first person who seems like they will show up for work every day. A growing business needs more than that. As for skills and education, they may be important, but it is more important to find someone you believe has integrity, will work hard, and is teachable.
Hiring is a lot like invoice factoring. Over the life of a growing business, both can make an enormous difference in keeping a company on track.
We cannot help you with hiring that first employee, but we are here to help you leverage the value of your unpaid invoices with debt factoring. If you would like to know more about how debt factoring can help you manage your business finances, reach out to us at any time.