Most start-ups and small businesses go through a series of growing pains. One of those pains occurs when you reach the point where your business is booming, but not quite enough to cover the cost of extra help.
These are the times you work yourself to the bone to cover each job, but perhaps you could afford a few employees after all. Suzanne Sataline of The New York Times recently published a story on small business hiring that sheds some light on when and how to build a team. If you’re wondering whether your biz is ready to step it up and start bringing people on, take this quiz below:
Small Biz Hiring Quiz
1. How much cash does your business have on hand in a checking or savings account?
a. Enough for six months of expenses.
b. Enough to pay the bills for next week.
c. Not much, and you’re desperately waiting on someone to pay an invoice so you can supply the next job.
2. What is the most common way you fund sudden expenses in the field?
a. With a trusted small business credit card, which you pay off each month.
b. With petty cash or a business checking account.
c. With your own personal debit card. Sometimes you remember to pay yourself back.
3. Do you have a Federal Employer Id number?
a. Yes, you’ve had one since you started the business.
b. No, but the paperwork’s sitting on your desk.
c. What’s a federal employer id number?
4. What do you know about making federal tax deposits?
a. Currently, you make them quarterly for yourself, but you realize you may have to make them monthly or biweekly if you hire employees.
b. You don’t make them for yourself yet, but you know you should. You’ll probably pay a slight penalty come tax time.
c. You were hoping to hire everyone as a contractor to avoid taxes.
5. Do you know the difference between a W2 employee and a contractor?
a. Yes, you know the government has strict laws about those definitions, and anyone that works in your place of business under direct supervision is likely a W2 employee.
b. You aren’t sure, but you’ll ask your accountant.
c. You thought you could just call the person whatever you wanted them to be.
6. How much time are you ready to put into managing people?
a. You’ve already done hours of work putting together training materials and policies, and you know leading people will add at least a few hours to your week.
b. You’re ready to work with employees and expect that it will add some responsibility to your plate.
c. The point of hiring others is to reduce your workload, not increase it.
Is it Time to Put Out a Hiring Sign?
If you answered mostly A, then you’ve done your homework, saved your funds, and are ready to hire someone. Bust out a payroll calculator, and let the games begin!
If you answered mostly B, then you know hiring someone isn’t going to automatically solve your problems, and you also know you may not be in the best place financially. Check out resources at SBA.gov to find out how to get ready for hiring in the near future.
If you answered mostly C, your business is unlikely to be ready to support employees. For help managing your business and getting to a place where having employees are possible, reach out to a local SCORE.org office for free advice and counseling.