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Make a Strategic Budget for New Hires

Forecasting your company's income and growth is critical to matching your staffing demands with the cost of recruiting an employee. While the ultimate purpose of employing a new employee is to expand the firm and increase income, you must be cautious not to overextend yourself.

Leo Welder, creator of ChooseWhat.com, an Austin, Texas-based startup guide, aspires to have enough cash flow and reserves to pay the new hire's salary plus 20% for extra overhead and incentives for one year. If his existing cash flow + reserves run out before the 12-month mark, he deems hiring an employee to be too risky.

To plan effectively, you may need to get your company's executives and human resources or recruiting managers on the same page when it comes to making cash flow a priority. Ensure that financial success is monitored not just in terms of profit but also of cash flow. Communication is essential, so keep financial partners informed so they can assist as required.

Consider temp, contract, and part-time employment options.

Consider if you really need to commit to a full-time employee or whether it makes more sense to attempt more flexible solutions as part of your projections. Temporary or contract personnel may react to short-term labor demands without incurring extra expenditures or committing to permanent staff, whilst part-time employees can expand your capacity proportionally as you develop.

If you wish to hire new employees but are worried about your capacity to hire a full-time employee, try doing so gradually. Hiring a contract worker for three to nine months, for example, to build procedures, or commit to a part-time hire.

Taking the opportunity to go from part-time to full-time—or from temp to perm—can provide breathing space for your cash flow as your firm expands. Don't overpromise your temporary or part-time recruits a bigger position in the future, but search for applicants that are interested in developing with your organization.

Be Creative in Your Compensation

Even if you feel you may be able to afford the expense of employing an employee, you should be cautious. If you need to hire new employees when funding is tight, as is often the case with startups and other small firms, you may need to be creative with your pay scheme. Of course, basic pay are vital, but for the appropriate individual, performance-based incentives and other features of the working arrangement may be quite significant.

Performance-based bonuses might help you keep your starting salary modest while increasing your cash flow. Set objectives for new workers that represent both their success and the general performance of the firm.

You should be able to recruit individuals who are prepared to accept delayed pay if you take the appropriate approach. If someone is prepared to accept less money in return for a part of the company's success, it is a strong indication that they believe in the brand and are willing to put their abilities and talents to the test.

Take Advantage of Non-Monetary Benefits

What if you are unable to pay top price for top candidates? A well-defined employer brand may assist your organization in attracting people, while your corporate culture can assist in retaining them. Both may help to recruit talent in lieu of a large wage. Candidates may be lured to your small firm because they believe they would be able to take on more tasks than they would at bigger corporations.

You may also provide mentorships and on-the-job training, which can attract professionals looking for professional growth opportunities while partially mitigating the expense of employing an employee. You may assist them reach their objectives by establishing where they want to follow their career path and providing low-cost online training tools and pairing them with senior-level mentors inside your firm.

With Confidence, Hire Your Next Employee

If you've decided that you can afford to hire an employee, you'll want to discover the proper one. You'll want someone with the talents and personality to help your company grow, whether you're searching for a full-time employee, a part-time employee, or a contract worker. Get more professional advice and recruiting ideas sent straight to your inbox from Monster.