Hiring an employee is one hell of an experience for entrepreneurs.
So many emotions bundled up into one decision.
One of the biggest challenges is figuring out how much an employee is going to cost.
I’m sure the first time you hired, you significantly underestimated how much it was going to cost.
In fact, I find that most business owners often underestimate costs by 25%.
I’m gonna be real – that’s unacceptable, but it’s not too late.
Today I’ve got a few tips on how to budget for hiring, plus a handy hiring cost calculator that will help you get an accurate idea of how much it will actually cost.
To get started, there are few questions you need to ask yourself.
Once those are answered, head on over to the ScaleTime Hiring Calculator to get a clear budget prepared.
Pitfall#1 – Hiring a full time employee when all you need is a VA or freelancer
A lot of business owners who feel overwhelmed look to hire someone full time, so that they can “really focus on what’s important.” The challenge is sometimes the amount of overwhelm you feel is not directly correlated to how much work you have. Offloading a few tasks to a VA or freelancer will often clear enough off your plate, or the plate of your employees, to put you back in the driver’s seat.
Pitfall#2 Hiring (an expensive) senior team member because you don’t want to handhold
I see this all the time. In some cases, a business owner wants to find a team member who has experience doing exactly what you need them to do. In other cases, an employee is begging you to hire someone more experienced to handle tasks they aren’t equipped for.
Either way, your goal is to get someone who can hit the ground running. You don’t want to have to spend time training someone, hand-holding them through every aspect of their job.
It makes complete sense, but for most biz owners, it doesn’t work out. And the reason is because they don’t have the proper systems, documents, or training in place to help a new hire get up to speed. Without them, you could hire a college intern for 1/10th the price, and they’d only be slightly less effective. Even the most qualified employees still need to learn the ins and outs of your business before they’re ready to hit the ground running. Implementing proper hiring systems, and then hiring junior employees is often much easier and effective (you can mold them to your business because they haven’t had time to develop too many bad habits yet).
Pitfall#3 Underestimating costs
A lot of my clients say they want to hire someone worth 30K or 50K a year, and then go out looking for that person. The thing they don’t think about is that salary is just one part of the equation. Many other costs go into hiring, including:
- Your time spent searching for candidates
- Onboarding costs
- Tax and benefits
The good news is – if you can avoid the first two pitfalls on your own, I can help you avoid the third. My Hiring Calculator helps you quickly estimate the true cost of that new hire. While most biz owners stick their finger in the air and hope things work out, you’ll begin the process bright eyed and bushy tailed.
Access the calculator here
Try it out and let me know what you think. If you were planning on hiring, how good were your estimates on how much it would cost vs. what you found using this calculator?