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Dear Abacus

I’m overwhelmed and need help. How do I figure out if I can afford to hire someone

By PRETTY BOOKS ON June 17, 2021
DEAR ABACUS is an advice column where local bean counter Abacus the Accountant answers your small business accounting questions.   Hi, I'm Abacus the Accountant, your local bean counter and small business management whiz. In this series, I'll use my accounting know-how to answer real questions you have about running your small business, from how to price new products to hiring employees and more. Got a question? Email me: people@pretty-books.com, subject line "Dear Abacus."

Dear Abacus,

I have been the owner and sole operator of my consulting business since we opened our doors a few years ago. Now I’m swamped with work, and I seriously need some help. I’ve been thinking of hiring an assistant to help me out, but I’m terrified! What if I can’t afford them? How do I figure out if this is a good move for my business? What should I do?

Sincerely,

Overwhelmed

 

 

Dear Overwhelmed,

Take a deep breath. We’ll figure this out. Firstly, congratulations on your growth and expansion! You’ve put in tons of work, and it’s paying off. You’ve probably realized by this point that the functions of a business require people. In order to scale and grow, you need to hire.

Now you’re considering taking on another employee, which is scary. You’re not only going to be responsible for their well-being and wages, but you’re also going to have to manage them. It’s okay to toss and turn over the decision—hiring someone is a big deal.

Any big decision requires a lot of planning. Consider the person you are planning on hiring and whether you can afford their rate. What are the cost implications of hiring this person?

Sit down with your financial advisor and have them help you project the true cost of hiring this employee. Remember, you’ll have to pay them for training, and it could be a little while before they can take on some of your work. Find out how much you can realistically pay this person. Project the impact on your cash flow and obligations. Find out how much you’ll have to put away every 15 days to be able to afford their paycheck. Assess your trends and cash reserve to make sure this is a sustainable move.

It will take a lot of planning, but you’ve got this.

Sincerely,

Abacus the Accountant

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The information provided in this post is for general informational and educational purposes only and is not a substitute for professional advice. Consult your financial, business, or tax advisor with respect to matters referenced in this post. Pretty Books assumes no liability for actions taken in reliance upon this information.

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