You’ve made your decision: You’re going to hire your first or second employee. You might already have one but you’ve realised you may need to expand further. Did you know that there’s more cost to your business than just wages when hiring additional staff? Obvious things that people think about when they hire employees is, “I’m going to have to pay their salaries”. Salaries could be your hourly or annual rate for having someone on board.
One thing you may not realize is that now if you have employees you’re going to have to process payroll; either weekly, fortnightly or monthly. However often you pay your employees, someone will need to do the work to process the payroll and make sure that all of the employer obligations are being met. For example, withholding the right amount of tax from your employee’s pay and paying them the correct amount of superannuation. The administrative cost of hiring employees is something that is not often thought about.
2. Staff cost
The second thing I want to point out as a cost of hiring employees, is where are they going to work? Unless you’re planning on having your staff work remotely, you will need to have a space for them to work from. In this space, it will need to be fitted out with furniture, desks, internet, laptop/computer, printer, office supplies, paper – whatever the employee needs in order to get their work done. They will need the tools and equipment to do their jobs, and this is often paid for by the employer.
In my experience, I’ve had staff for over two years. The first set of people that I hired I was fortunate that the roles were small enough that we could all work remotely, with just internet meetings or video call meetings happening periodically. I was fortunate, as a business owner, because I didn’t have to provide my staff with a desk or computer because they already had their own.
However, things were a bit different in my third year in business. I had staff turnover, and as new employees came on, I added additional staff roles to Balance Tax Accountants. My new staff didn’t have their own computers and didn’t have their own place to work. Also, what I found was that when we were growing we got more done when we worked together. I had to buy computers, office supplies, and find a space that we could work together from; whether that was a co-working space or whether that was an actual leased office space. These are all things that you don’t necessarily think about when you hire staff, I for sure didn’t!
The last thing I want to talk to you about when you hire staff is insurance. Because I had employees, I was required by law to have worker’s compensation. Worker’s compensation insurance isn’t something that I necessarily had when it was just me working in my business by myself. And so, this is something I had to go out and make sure that I had the right amount that I needed, based on local laws.
I also needed to buy insurance to cover the equipment, because I had bought all these computers and I had leased an office. I needed insurance in case we had damage done to our equipment, in case they were stolen, in case we couldn’t work in the office or we had a business interruption that prevented us from servicing our customers. Insurance is the third cost that people often don’t think about when they’re hiring employees.
Now, I think the first thing to be said is that not every business needs to scale to be successful outside of the owner and it’s your decision about how big you want your business to be.
My vision for Balance Tax Accountants was to help small business owners. Since I’ve started, what I’ve found is that the number of people who came to us asking for help, I could not give a level of customer service that I was happy with without involving more people into the business. This is the reason why I personally decided to hire and grow Balance Tax Accountants beyond myself.
Now, after you’ve actually made the decision to introduce or to hire another person into your business, it’s really important that you make sure that they are the right person. The right person for the right role. What I did when I was hiring a junior tax accountant, for example, in the job ad I did not once mention you must have five years experience in this or you must have a degree in that. In my job application, I talked about the values of Balance Tax Accountants, what makes us different from your average accounting firm, I talked about how we support local, we pride ourselves in doing a great job, that we have work-life balance; we go home and we eat dinner with our families every night.
I also talked about how in the accounting industry it’s really difficult to find people with personality – who are friendly and approachable. How I needed somebody who actually enjoyed working with other people and talking to clients. Finally, the last value I talked about was that we treat other people the way we want to be treated. In the accounting industry in order to get ahead, it can be very cutthroat. The pressure to build as many hours as you possibly can and well, yes, we need to make money. This is a business. At the same time, it’s more about teamwork, getting the job done well, making sure our clients are happy, and treating other people inside and outside of the business the way we want to be treated.
What I found when the applications for this role started coming in, it was really easy for me to choose which applicants made it to the next round. An advertisement from an accounting firm asking for a junior tax account, people would not apply unless they felt like they were qualified for it. And so, even though I didn’t necessarily mention we want X amount of experience, the people who did apply had several years of experience and they had qualifications and they had degrees and they had the relevant knowledge and skill set.
I feel that when you’re a small business and you’re introducing other team members or employees into your business, it’s really important not to forget about hiring based on shared values. Because of the longevity of that person staying with your business, growing with your business, being on board. Obviously, there are good times and there are bad times. There are sometimes tough times in small businesses and you’re gonna need your team members to be flexible and committed to more than just the paycheck. Hiring someone just based on skills and experience isn’t necessarily going to get you someone who is loyal to you and your business.