When To Add Staff Part I

by | Dec 22, 2006 | PKF Texas - The Entrepreneur's Playbook®

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.

I am often asked on when, and how does as organization begin to look for new employees to join their company. In addition, the economy is pretty hot right now in Houston, so finding good employees can be a difficult challenge. 

Entrepreneurs trying to navigate their ship through the economic waves may not have spent much time wondering about whether to add new employees. However, as the economic recovery continues, they may want to start thinking about it.

But it raises a simple question: How can a small-business owner know when it’s time to add staff?

Phillip Harper suggests, “You need to add workers if:

  1. The amount of overtime pay is increasing. Aside from spending issues, your workforce may be nearing burnout
  2. Your backlog of sales is (or may soon be) growing.
  3. Your business’s billing multiplier has risen above the norm. To get the billing multiplier divide your net revenue by your direct labor costs. Check your industry average against your actual results and make adjustments accordingly.
  4. Your debt is at a level that allows you to assume additional risk.

Solid advice on all fronts.


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