Can Your Business Afford Another Employee? Look at These Numbers First

Your company is busy.

Your existing team is stretched.

Customers are waiting.

It feels obvious:

It's time to hire someone.

Maybe it is.

But before posting the job, there's another question you should answer:

Can your business financially support the new employee?

Salary Isn't the Only Cost

Suppose you're considering hiring someone for $60,000 per year.

The actual financial impact may extend beyond that salary.

Depending on the position and business, additional costs can include payroll taxes, benefits, insurance, equipment, software, training, recruiting and workspace.

You need to understand the broader financial impact.

Look at Your Revenue

Start with your company's historical revenue.

Is revenue consistent?

Growing?

Seasonal?

Declining?

One strong month shouldn't necessarily determine whether you're prepared for a long-term payroll commitment.

Understand Your Profitability

Revenue alone isn't enough.

A company generating substantial sales can still operate with tight margins.

Look at the relationship between revenue, costs and profit.

How much room actually exists to absorb additional payroll?

Examine Cash Flow

Hiring creates an ongoing cash requirement.

Payroll arrives whether your customers have paid you or not.

If your company has significant accounts receivable or seasonal fluctuations, cash flow becomes particularly important.

Consider the Return

The conversation shouldn't only be about what the employee costs.

Ask what the position makes possible.

Could a salesperson generate additional revenue?

Could an operations employee allow the company to handle more customers?

Could administrative support free the owner to focus on growth?

Understanding both cost and potential return creates a better framework for the decision.

Use Your Financials to Make the Decision

This is exactly why accurate bookkeeping matters.

Your financial records aren't simply something you maintain for tax season.

They're information you can use when making decisions about your company.

SBC Bookkeeping & Consulting combines ongoing bookkeeping with consulting support that can help business owners better understand cash flow, costs, profitability, budgets and forecasts.

Before making your next major financial commitment, know what your numbers are telling you.

Don't make the decision based exclusively on your bank balance or gut feeling.

Build the decision around financial information.

SBC Bookkeeping & Consulting can help you get there.