Small business owners teach how to navigate a tight job market
In a highly competitive job market, hiring is a constant challenge for small businesses. That’s especially true for professional-services firms, where the unemployment rate is hovering around 2%.
With quality talent at a premium, it’s no surprise, a recent Kabbage survey found that payroll is the biggest expense for professional-services businesses throughout the lives of their companies. This makes it even more critical that business owners know when to hire, how to budget for payroll, and what the returns on any potential hire might be.
In this article, several Kabbage customers share the tactics they use to manage the hiring and payroll process. Learn more about hiring and other best practices for navigating your early years in business in our professional services growth guide.
Value Your Employees, Figuratively and Literally
Cristina Garza started her accounting-services business, Accountingprose, while traveling around the world with a monk who ran the organization where she served as CFO.
She’s focused on treating her employees well and paying attention to their individual needs and outside interests. But at the same time, she’s learned to gauge what each employee can add to her bottom line.
“For each employee, when they’re at their peak efficiency, we can bill three times their salary,” she says. “If I have one staff member that we’re paying $50,000 a year for salaries and benefits, we can expect a three-fold return. So we’ll have $150,000 in revenue for each head that’s in the office.”
Bring Your New Hires Along Slowly
Hiring and developing employees is a consistent challenge for Steve Gazda, owner of a Farmers’ Insurance firm in East McKeesport, Pennsylvania.
He’s constantly changing job descriptions for his existing employees as the company grows. Recently, he’s begun advertising for entry-level and part-time positions, with the hope of eventually developing them into salespeople down the line.
“People are scared when they see the words ‘insurance agent,’ in a job listing,” he says. “But I say, ‘Look, we’ll show you what we do in our business. Six months to a year down the road, we’ll get you your insurance license. And if it’s not a good fit for you and you don’t want to do it, well fine, we’ll still always have a part-time position for you here.’”
The More You Hire, the More You’ll Get Back
Kevin Hennessey has always sought to hire aggressively as he’s grown Brabo Payroll, his Plymouth, Massachusetts-based payroll-services firm. He invested $100,000 of his own money in order to bring on an initial sales staff.
“I constantly push money back into the company,” he says. “Because the later in the game you take it out, the more money you’re going to have.”
But Kevin actually wished he’d been even more aggressive about hiring in those early years.
Kevin’s learned that hiring one salesperson at a time actually slows him down—and winds up costing him more money for training costs in the long-term.
“I think reactively hiring puts you in a worse position to get capital,” he says. “If I can get a capital stimulus, hire 10 or 15 people and train them all at once, it’ll take about four months for them to get up to speed. And then we can make a big push toward more growth.”