It is super exciting when a business owner contacts us to hire HRlogy to partner with their business. They are even more excited because their business is growing as well as their income and they need help to manage their progress. However, we always have two questions for them: 1) Do you have enough work available to justify hiring even one employee? 2) Can you afford to hire someone? If the business owner cannot confidently answer those two questions in the affirmative, it is best that they regroup, revisit their business plan and consider some alternative options. First, let’s discuss these two questions:
Do You Have Enough Work Available?
Many small businesses will only need part-time* employees when they begin to hire unless they can truly hire full-time* employees and keep them busy. Even if someone is a part-time employee, you will need to make sure there is enough work to keep them busy for the minimum amount of hours you determine to be part-time. For example, if you determine that part-time at your business is anyone working 15-30 hours, then you will need to make sure your employees are busy working during 85-90% of the time they are at work. Allowing employees to stand around being unproductive most of their shifts is a waste of their time and your payroll. Also, if you are constantly sending employees home early because there is a lack of work, you will create a poor morale and increased turnover for your business. The bottom line is if you don’t have enough work to justify hiring employees to work for you on a daily basis, you should consider waiting to hire or hiring independent contractors. We will discuss independent contractors soon!
Can You Afford to Hire Someone?
One of the most common legal issues that businesses face is wage and hour claims. This happens when employees are not paid properly or not paid at all. Wage and hour issues can get ugly and require a complete audit of time-clocks, payroll records and anything else the department of labor will require of you. If there are multiple employees making claims, the cases can go on for months, or even years. If your business cannot afford to add payroll or add more people to the payroll, you should refrain from hiring until you can do so. Although you may have plenty of work for employees to do (you answered yes to the first question), but you also need to be able to pay them whether or not your products or services are selling. If your business does not have any revenue for a week or even a month, you still have to pay the employees that produced or sold your services or products. Even if it means you, as the business owner, will not have any personal income to pay your own mortgage or other personal bills, you still have to pay your employees so they can pay their bills. The first time you miss payroll, you should expect your employees to complain to you and, most-likely, the federal government. Once the government is involved, not only will you owe the wages due but you could be subjected to additional fines. The last place you want to be is on the federal government’s radar as an employer that does not pay its employees. Therefore, be sure that your business can truly afford to pay employees properly and on time.
Again, if a business owner cannot confidently say yes to these two questions, we will discuss alternatives or work toward this goal in the future. It is great when a small business can add jobs to its local community, but you also don’t want to find yourself in legal trouble because you did not properly prepare to expand your workforce.
*Federal laws do not define the number of hours one must work to be considered full-time or part-time. This is determined by the employer.
NEXT: “What is Human Resources and Why Do I Need It?”