Hiring? 3 Ways To Avoid Understaffing Or Overstaffing Your Small Business

Have you tried to hire anyone lately? 

Staffing is a pain point for every small business — especially now. But here’s the thing: if your business is running on too few employees, the team is overworked, which could leave you staring down resentment, frustration, and an ability to grow. Too many employees? You’re spending more than you need to while your team gets because they don’t really feel fulfilled.

In a perfect world, everyone working for you has a defined role, set tasks, and work-life balance. They feel fulfilled and they’re delivering good value for the company. Reaching this point depends on finding the right size staff for your particular business — what I call the sweet spot. It can be tricky to pinpoint and just as tricky to maintain as you start and grow your business. Having owned and operated several small businesses myself over the years, I’ve picked up a few methods that you can use to right-size your business.

1. Know When It’s Time For Your Business To Grow.

Feeling overextended running your business? Welcome to business ownership! It’s easy as an employee to criticize management, but when you’re the one running things, you quickly realize how much it costs just to get off the ground. Every little bit helps. That’s why growing your business too soon can be deadly. You should feel challenged, like you’re juggling and have to continually learn how to keep another ball in the air.

This might sound harsh, but you’ll need to push your employees out of their comfort zones too, within reason, of course. (Many bosses, myself included, have had to sit across from a tearful, stressed-out employee at one time or another. I can tell you, no boss wants to be in that position.) But the simple truth is running a business is difficult, and growth is even more difficult. As long as your employees can see you working as hard as — or harder than — you are asking them to, then you can stand behind your management. It’s also vital that you stay vigilant about that so you don’t lose people and damage your reputation. 

That’s why, especially when you’re just starting out, it’s more about the type of people you have working for you than the number of people. One of the top reasons new businesses fail is having the wrong team in place. You want people with a willingness to learn, ability to wear many hats, and desire to build something together. These early days are often the most magical time for a business owner. And when you’ve all built something successful, it’s important to reward those people as well.

So when is the right time to hire? When it hurts not to. When not having more people will prevent you from growing your business. For example, you’d otherwise be in a position to accept a big contract but won’t be able to deliver without more help.

2. Beg And Borrow … But Don’t Steal.

Growth comes with all the best problems — but they’re still problems. A successful business is not a stagnant beast; it has its own momentum. At some point, to continue that success, you’ll be in the position of having to allow your business to grow. But even for a successful business, that’s not always easy. You might be stuck in a Catch-22: to grow, you need more people — but you can’t afford to pay them unless you grow. That’s what friends and family are for–someone who trusts you enough to invest in you without expecting to be paid back right away. In fact, the majority of businesses are started with personal or family savings.

Take that advice with this caveat: most small business owners don’t have friends and family with deep pockets. Plus, asking for cash can make Thanksgiving dinner pretty awkward. This is where financing options come in — everything from loans to credit cards. While you may not want to make a habit of making payroll with financing, when you’re waiting for an invoice to come in, ramping up, or get hit with big, unexpected expenses, a line of credit can be a boost to your cash flow.

Still, before seeking any outside financing, it’s smart to look within for ways to save money. One of the best ways is — I hate to say it — to take a pay cut. And yes, I mean you, not your employees. If sacrificing now means reaping the benefits of a successful business later, then it’s worth it. If you can see the light at the end of the tunnel, the scenario where hiring this additional person or people will take your business to the next level, then go for it. 

At one of my past businesses, there came a day when we found ourselves at a growth crossroads: we were doing well, but I still had to devote time to selling deals. I could’ve just brought on another sales rep, but by luck I found someone with the necessary skills to be more than that: a sales team builder. It wasn’t initially my plan, but by freeing up the necessary cash, I was able to let him run with the ball. The result was explosive growth. We went from about $80,000 in monthly revenue to closer to $200,000.

As small business owners, we knew there would be risks involved when we decided to pursue our dream, right? It’ll take more risk to make that dream grow. Be smart, but don’t be afraid to take those calculated risks.

3. Can You Outsource And Still Grow? Yes.  

Think of independent contractors as the small business equivalent to training wheels when you were learning to ride a bike. They’re a low-risk way to outsource additional work while you take growth for a test drive. (Make sure to fully research the pros and cons of–as well as state and federal laws for–hiring contractors versus employees.) Essentially, a contractor, a.k.a. “freelancer” in some fields, is a self-employed person you bring on to perform a task. Of course, you can continue to renew their contract, but a contractor is not an employee of your business; they are 1099 workers.

Contractors can be incredibly useful when you need to tap into specific skill sets, such as web design and management. You might not have the budget or need for a full-time web manager for your business at the moment, but having someone maintaining your website occasionally can help promote your business. Similarly, marketing and social media efforts, as well as accounting and other functions are great areas to try out contractors.

By building a stable of reliable contractors, you can grow your business incrementally, without having to commit to carrying a larger staff, and get great talent and skills when you need it. So unless you require someone fulltime and permanently, you’ll probably get more bang for your buck using a contractor.

Small businesses are a risky undertaking. Operating capital is usually not very big, and profit margins are probably tight. It’s essential when you’re starting up to do so with the right team, a small but dedicated group of people who are willing to put in the extra effort to build something you can all be proud of. Stick with that group until not bringing on others will prevent you from continuing to build your success. Then, find ways to free up cash and look for the specific hiring need that will pay off exponentially. If you just want supplemental support or aren’t ready to commit, bring on contractors to help you level up. Your business might just grow bigger than you ever imagined.

Disclaimer: The information provided in this blog post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. For advice specific to their situation, readers should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.