How To Add Staff Without Having To Front The Cash
These tips from other owners may enable growth despite the challenges.
Your small business has big potential to grow. But success requires a plan. Do you have one?
Maybe your dreams include adding machine tools, moving to a better location, or finding a marketing wizard to take your social media to the next level. If you choose to grow your business with only the cash on hand, it may take much longer than you expect.
New equipment can be acquired using secured lending. A new building will likely require a mortgage. However, the idea of financing additional staff while avoiding more debt may raise questions in your mind.
What Are My Options?
You want to find funding without giving up control or ownership. Yet you’ve reached a limit in your business of what you can do by yourself and with existing staff. You need to hire but may not see how you can afford it.
Thinking through your options involves two workstreams:
- Finding the right talent, and
- Making funds available when needed.
A recent Chamber of Commerce study reported that only one in three small businesses (33%) had searched for, recruited, or interviewed new workers this year. With an improved outlook for the economy, now is the best time to begin planning.
Owners know the upfront costs of adding staff. Wages, benefits, employer taxes, contributions, and even training costs will put a dent into any operating budget.
While small business owners should explore all options, bringing in partners or handing equity to new hires may bring the help needed but reduce your control over time. Likewise, interest payments to service new balance sheet debt can be costly. As a result, some owners look for more innovative solutions.
Develop A Plan
You know you can’t move forward with your foot on the brake. The business won’t grow by sitting still. Moving forward means perhaps making some mistakes while knowing you can make adjustments later.
Unless your customers are willing to provide up-front deposits or your suppliers are happy to relax payment terms, this approach to funding employment growth with no additional cash may help:
- Determine specific sets of skills and experiences needed to support your growth plan. A role requiring no previous experience might cost less but require significant on-the-job training before becoming productive and revenue-generating. Conversely, seeking a highly-skilled marketing manager may generate sales next month but require paying a signing bonus today.
- Determine the number of hours needed in the role. Will part-time assistance be enough to handle administrative tasks and free up the owner’s time to focus on higher-value work? For positions requiring high-level skills and pay, can work begin at quarter-time or half-time for a period or two?
- Match resources to the task. Explore all options to balance the need for talent with both the short- and long-term costs. For example, many owners use Virtual Assistants to provide support as needed at minimal hourly rates. Others successfully use student interns to fill specific roles. Students earn college credit while being assessed for hiring potential. Still, others turn to skilled retirees, homemakers, or contractors paid on Form-1099 instead of adding to the payroll
Engaging these services without the upfront cash can be tricky. With planning, owners may fund part-timers using just existing cash flows. Similarly, full-time hires and contractors could be paid monthly at first to align outgoing cash with new sales revenues better.
Another way to secure cash during periods of staffing growth is to turn to a payroll funding solution. You can satisfy payroll needs for up to 28 days and avoid more expensive options such as invoice factoring, lines of credit, or hard money loans. This option might also cover signing bonus payments.
Growth comes from having more people going after new business. Sometimes owners need to add staff but do not have funds for the initial investment. When faced with this situation, remember to focus not solely on the cost of the positions. Take time to understand the value added and look for innovative ways to achieve your goals.