How can you not love Alex Zapesochny’s blog post about interviewing and hiring? If you haven’t read it, please take five minutes to do so now. It’s dead on. It got me to thinking… Alex is the co-founder and president of iCardiac Technologies, a successful startup company here in Rochester that has combined great ideas, technology, and staff to create a growing company. Alex is blessed with being in a position to have jobs to fill in our local community. Not all small businesses are so lucky.
Most small businesses – especially the 21,000,000 business in the US that have no payroll – struggle with moving from a one person operation to a two person operation. Even a two or three person company is talking making a huge increase in expenses by adding just a single individual to their payroll. The Social Security Administration says that the average US median individual wage in 2011 was $26,965.43. If we round up to $30,000 per year, that means that adding another job is like spending an extra $45,000 every year once you include payroll taxes, healthcare, benefits, cost of hiring, increased insurance and disability premiums, and so forth. Plus, let’s not forget all the time spent trying to find the right person in the first place. If you’re a one or two person consulting shop getting paid $100 per hour, taking two days off to interview people and make a hiring decision just cost you upwards of $2000 in non-billable time!
It’s no wonder that jobs are hard to find these days! They’re expensive!! Most businesses (mine included) spend the greatest percentage of their money on payroll, not cost of goods or research and development.
This is why it can be so hard to make that leap from working by yourself or with a partner to hiring your first sales person or customer support specialist or whatever it is that you need to grow your business. Assuming $50,000 in wages, hiring fees, time lost to finding the right person, payroll expenses, training, and whatever else it takes to hire someone for a year, it can seem like a long time before that investment pays off if you’re operating razor thin margins with very tight cash flow. It’s the problem of which comes first – additional work that can pay for hiring a new person or the new person that increases your capacity to do more work? Sometimes, you just have to bite the bullet and hope for the best.
But hiring someone is more than just looking at the bottom line in terms of dollars. You have to look at what it brings you, the business owner, by shifting tasks to someone else that is more focused and efficient at them. This frees you up to work on your business instead of working for your business. This is often the first step down a path that leads to growth, increased revenues, and even more hiring in the future. Who knows? Hiring your first or second employee may even earn something more useful than money: more time!