Can you afford to hire employees?

Thinking of taking on some employees? Having a workforce behind you can allow your business to get more done and take in more profit. However, looking after these extra staff members costs money and it’s important that the profits cover these overheads.

You should always make a financial plan before taking the decision to become an employer. Here are just a few of the costs of being a boss to consider, including some advice on where you should save and where you should spend.

Recruitment

It’s possible to recruit staff cheaply, but you may not always get the best employees for the job. Thorough job marketing will allow you to attract the best candidates you can get. Consider paying to put online ads on job listing sites as well as potentially advertising in your local newspaper. You can also pay a recruitment company to find you staff members and fill vacancies.

If you currently already own a business, you may need to take time out of your daily work schedule to read job applications and then arrange and conduct interviews. You don’t want to rush this stage as it could impact the quality of employees that you attract.

You may have to close up a business whilst you conduct interviews or you may have to work overtime to keep things running so take this into consideration. Also, consider the costs of criminal background checks and credit checks if they are needed. It’s generally good practice to pay applicants for trial shifts too.

Training

Staff will need to be trained up if they are to do the job proficiently. This could cost money in some cases. You may have to pay to get your staff licensed in some cases.

In other cases, you may have to hire people to help with training or put staff members on a course. There’s also the cost of wastage to consider in some jobs (e.g. teaching a trainee chef to cook a meal or doing a demo with a machine). In some jobs, you may be able to do virtual training as well as on-the-job training that saves money (e.g. doing a demo with software or practising on a reliable customer whilst giving them a heads-up that you’re using a trainee). You should pay employees during their training period.

Wages

Once you’ve hired and trained up staff, you’ll need to set a wage. This needs to at least be minimum wage – unless you’re taking on voluntary staff or an apprentice. Minimum wage varies by age so bear this in mind. Experienced staff or those in senior positions will expect to be paid more.

If you’re not sure how much you should be paying your employees, it’s possible to do a salary survey. You may want to start at minimum wage for a set period and then raise they pay if employees are able to prove themselves in the role.

As an employer, be prepared to get paid last – it’s important that during a rough month your employees get paid before you. Some jobs may require giving employees a fixed income each week, whilst other jobs may be paid based on varying hours. In the latter case, it may be handy getting some kind of payroll software to help calculate this. You may even want to hire an accountant to ensure an adequate amount of tax is being paid on each employee’s wages.

Office space

If you’re currently working alone, you may need to expand your office space when taking on new employees. Hiring staff also requires certain health and safety parameters to be met, such as having a suitable fire escape and good office working conditions. You may even need to consider necessities such as extra parking. This could result in paying more rent for a bigger and better premises.

Shared office space is a cheap way to get around this, which involves you sharing premises with other businesses. In some jobs that are computer-based or phone-based, you may also be able to hire employees remotely whilst covering the costs of any software they need as well as their phone bill if needed.

Equipment

Hiring staff may require buying extra equipment. This can be a big cost than many employers overlook. You may need to buy an extra desk, chair and PC. You may need to pay for a uniform in some cases too.

On top of this, you should consider various compulsory health and safety equipment. This may involve everything from protective clothing for handling chemicals to an available fire extinguisher in the event of a fire.

It’s possible to skimp on cheap equipment, but consider the impact this could have. Something as simple as buying ergonomic office chairs could prevent back injuries that could later result in injury claims.

Certain equipment could also make employees jobs easier and make them feel looked after such as up-to-date software and tools or simply enough telephones or tills to speed up productivity. You may even want to treat employees with equipment such as buying coffee machines or vending machines.

Insurance

Every employer needs to take out an employer’s liability insurance scheme by law. If an employee falls ill or is injured whilst working for you, this insurance scheme will help you to cover any claims an employee may make. There are hundreds of insurance companies out there offering this scheme – it’s worth shopping around first to get the best price and package for you. Like other insurance schemes, you can add a deductible to lower costs. You can also lower insurance rates by improving health and safety in the workplace.

On top of employer’s liability insurance, some employers may want to take out other non-compulsory schemes. These may include professional indemnity insurance, which protects you against any claims against your staff members for negligence (i.e. if a staff member accidentally injures a client or damages a customer’s property).

Meanwhile, if your staff are going to be driving vehicles for you that your company owns, you’ll need to take out a commercial vehicle insurance scheme so that they are covered. You can also save costs by shopping around for these insurance schemes. You may even be able to save money and keep expenses more organised with a business insurance package containing multiple schemes.

Absence pay

When employees are absent, you may still be required to pay them in many cases. Your staff are entitled to a certain amount of holiday leave throughout the year, throughout which you should offer them holiday pay.

Employers are also entitled to give pay sickness pay, maternity pay and payment on training days. This can be less than regular pay must still meet minimum legal national requirements. Make sure that you’re recording your employees’ absence so that they’re not taking too much time off sick or taking too many holidays.

Employee incentives

Incentives can help to motivate staff to work harder and can improve job loyalty. Incentives could take the form of rewards for working overtime, reaching a target or simply achieving good results in some way. This could be a monetary bonus. Alternatively, you could give them something physical as a reward ranging from a bottle of champagne to a paid holiday.

Other incentives may simply be there from the beginning to urge employees to stay at your company. This could be something that adds to their quality of life such as a company car that they can also use as a personal vehicle or discounts on local services such as cinema tickets or gym memberships.

You could even offer them a special savings account such as an FSA or life insurance. There may even be incentives such as a work phone that allow them to separate their home and work life better. Even something as simple as a Christmas party or snacks in the office or the occasional team meal out could help to serve as an incentive.

Pension

It’s soon to become mandatory for every employer to offer their staff a workplace pension. You should make sure that your company is earning enough money to contribute to this scheme. You can pay more than the minimum amount as an incentive, or pay bonuses into someone’s pension.

Legal fees

It’s worth having a legal written contract in place when taking on employees. This can help protect you from employees walking out on you, causing damage to your business and property or helping to cover redundancy.

It’s worth getting the help of a solicitor when writing out a contract so that it is legally tight. In fact, having a solicitor on call can be useful for all kinds of situations involving staff – whether claims are being made against them or they are making claims against you.

You may also want to hire the help of a solicitor to ensure that you’re following all the correct laws and regulations when it comes to the wellbeing of your staff. Specialist HR lawyers may be able to advise you on this.

Free newsletter signup
Never miss another Bankless Times news story as we send you hand-picked articles every morning
We hate spam. Your email address will not be sold or shared with anyone else. You will only receive our daily newsletter. You can unsubscribe at any time.

Leave A Comment

You must be logged in to post a comment.