For Small Business Owners, Hiring a Staff Member Can Save You Money Long Term—Here's How

Solopreneurship, the act of setting up and running a business alone, can only get you so far. Eventually, business owners need to hire more people to grow the company in the right ways. After all, founders need rest too. On the other hand, it can be really difficult to hire a new team member and to stay confident that the (often costly) hiring and training process will eventually pay for itself. Fear of hiring the wrong person, concerns over how much to pay, and the inability to delegate to someone new can feel paralyzing.

But rest assured: If there's more demand for your business than there are employees to fulfill it, then there is a financial benefit to hiring a staff member. Here's why you should hire a staff member to save your business money in the long run—and the best ways to do so.

New staff can create new opportunities for growth.

Dan Belcher is the founder and CEO of Mortgage Relief, a real estate-dependent company that operates in Ohio and Oklahoma. He found that hiring new employees gave his business a fresh perspective.

"They bring new ideas to the company, boost morale, especially to overworked workers who want to upskill, but are unable to because of the workload," Belcher explains. "New employees can help you expand your business and increase revenue."

The timing of onboarding new team members may seem like a moving target. "Hire too soon, your cash flow can dry up. Hire too late, and unfinished work can pile up," he adds. "When you observe that your employees are increasing their overtime hours despite being efficient, it may be time to bring in new employees. New opportunities will arise when you have more people to help you grow your business."

Opportunities might come from some unlikely places. Maybe they'll show up in the form of staff retention: staving off burn out and keeping high-performers from looking for other jobs with a lighter workload. Also, outsiders bring new ideas to optimize existing processes and to find new cost-savings and consistent revenue. Either way, these kinds of changes should begin as soon as possible.

Over the long term, top-notch staff members pay for themselves many times over.

If onboarding seems too daunting, go for a freelancer...

Many solopreneurs get intimidated by the notion of hiring a full-time employee. Fair enough. Time for training might be scarce, and space might be limited. Rather than crafting a job description and hunting for a permanent staffer, outsource to a freelancer any low-value or time-consuming tasks that can be discreetly separated. Returning client emails, fulfilling shipping commitments, and creating social media content are things that an experienced freelancer can do well.

Hiring a freelancer saves you money in the long run; after all, it's a waste of salary to task the company founder (you) with licking all the stamps or sending out template emails. Contracted workers can be hired at an affordable rate, and they help only when needed. For seasonal work or peak surges, they jump into action. And, when work is slow, there is no obligation to keep them on payroll.

Furthermore, freelance writers, content creators, and editors, for example, are subject matter experts in the tasks they perform; they add value by applying industry standards that deliver high-value output and generate sales. The best part is that they don't require the same training or overhead costs as a full-time employee.

...or keep it in the family and hire a responsible relative.

Many small businesses are also family-run. Jewelers, crafts, and trades are commonly passed down from generation to generation—because the model works. If children, siblings, or spouses are interested in lending a hand, give it serious consideration before assuming it won't work out. It may take some trial and error, but that's true for any new hire. Hiring the right employee might be a matter of choosing one of the relatives under your roof.

Janice Wald runs a blog and has tried employing her kids. She realized that something was wrong when her 20-year old didn't want to be hired. "I genuinely needed her help, but she never started the work," Wald says. "She clearly didn't take our conversation or my expression of my need for her help seriously." But rather than give up on family altogether, she turned to her older daughter, who has much more experience in the industry. "I have learned that the more mature the child, the better the experience is going to be," Wald continues. "Also, give them some form of compensation or, as in my case, they won't take your need for help seriously."

Mike Jesowshek, the CPA behind the Tax Savings Podcast, also says that hiring your kids is one of the best-kept tax saving secrets. "If you pay your child through a sole proprietorship or Single Member LLC, you do not need to withhold social security, Medicare, etc. if your child is under 18," Jesowshek explains. "Your child can claim the standard deduction (up to $12,550 in 2021), so the first $12,550 would be tax-free, and then any income above that would be taxed starting in the lowest tax bracket," he adds.

Bringing relatives into a business is win-win: you can get a business deduction, and the relative potentially pays no taxes on that income. The IRS offers comprehensive guidance on the tax implications of running a family business.

Don't be afraid to outsource the hiring process.

Building a steady relationship with a freelancer or contractor on Upwork, Fiverr, Flexjobs, and other job portals can make for a gradual and budget-conscious transition towards scaling a business.

Of course, the very idea of screening, interviewing, and testing candidates might give solo- and small-business owners hives. Not only is it time-consuming work, but some fields require diagnostic tools and proof of credentials that can distract an owner from going after big clients or generating much-needed business. Richard Lubicky, founder of Real People Search says that his company found that performing background checks, matching candidate qualifications, and understanding applicants' long-term goals took a lot of time.

"We used to hire an employee by conducting interviews and checks on our own," he says. "However, last year we switched to hiring agencies to find and hire the right talent for us. The employees hired by staff managing services are more productive and suit our business requirements." Hiring an in-house human resources team was cost-prohibitive for his start-up—but outsourcing turned out to be an excellent alternative.

If the new role is highly paid or if it has the potential to make or break the business, it is wise to use a professional recruitment service that can ensure that the selected person has the potential to double or triple revenue. Furthermore, such companies may investigate local labor and employment laws that would apply in your city or state. Thus, their research could avoid costly compliance missteps or mistakes.

Paychex and Ziprecruiter, among others, are professional human resource companies that specialize in recruitment for small and medium-sized businesses. They can help craft a job description, recruit across a variety of online platforms, collect candidate documents, run background checks, and conduct salary negotiations. Request a quote and check rates before assuming your business is too small to afford or merit this red carpet treatment. You might be surprised to find that some services are free or come with a very nominal fee, but the return on investment is much higher than anticipated.