Imagine you’ve successfully launched your small business with just one or two dedicated employees by your side. Your hard work has paid off, and now your business is finally on the upswing, with new opportunities on the horizon. However, with limited capital in the bank, it may be hard to think about seizing opportunities with a bigger staff.
In this scenario, loans for businesses are the lifelines you need. A good loan program, like that of the Philippines’ Maya Flexi Loan, may offer you the necessary funds to fuel your business growth by expanding your workforce. Among other things, your loan can help you meet the initial costs that come with hiring additional staff and allow you to compensate your team members in a way that will keep them satisfied, productive, and motivated to do their best for your business.
Here are some further tips for strategically utilizing your business loan to expand your team and propel your small business to new heights of success:
1) Assess Your Needs
In most businesses, labor costs are some of the most expensive business costs. Assessing your current staffing needs before you actually hire and disburse funds from your loan is essential due to the high labor costs that most businesses in your sector often expect. To begin, closely examine your business operations to identify areas requiring additional support. Then, consider factors such as workload, skill gaps, and projected growth as a result of hiring.
Take, for instance, a growing e-commerce business experiencing a surge in customer orders. To assess your recruitment needs, analyze your order volume trends, the nature of your customer inquiries, and your current fulfillment efficiency. The goal would be to optimize efficiency and improve customer satisfaction by identifying bottlenecks in order processing and customer service. Once these are properly identified and you know just how many staff members you should hire to meet those specific needs, you can further determine the need for additional warehouse staff, customer support representatives, or logistics coordinators to maintain high service levels and support your continued growth as a business.
2) Calculate the Costs of Hiring
Of course, expanding your workforce comes with costs. Salaries and benefits packages will comprise your primary expenses, inclusive of expenses like healthcare, retirement plans, and paid time off. To determine a potential employee’s salary, do your own market research about typical compensation for their role, as well as their skills and experience. Consider, too, your current budget constraints after you’ve taken out your business loan, and be forthright about proposing a salary you can actually pay.
Also calculate recruitment costs for running ads in traditional media and contemporary media platforms, conducting pre-employment assessment, and hiring agency services if you will be outsourcing this role. Don’t forget that training and onboarding new employees will also contribute to the total recruitment cost, and factor these in, too. With the specific figures and ranges in place, you’ll have a more concrete basis when negotiating salaries and benefits.
3) Allocate Your Budget
Once you’ve arrived at a clear understanding of your costs, allocate your budget. Determine how much of your loan you can afford to allocate towards workforce expansion, and prioritize spending based on your business priorities and strategic objectives.
Remember to remain flexible in your budget allocation to adapt to changing needs as your business grows. For instance, if you run a flower shop and receive a last-minute request for a wedding event, ensure you have the financial agility to enable you to pay for additional stocks and labor.
4) Develop a Dedicated Recruitment Strategy
A well-defined recruitment strategy is essential for attracting top talent to your business. Discuss with your recruitment team whether you’ll need a remote, hybrid, or onsite worker, considering the benefits and drawbacks of each.
For instance, while you may save on overhead costs with remote workers compared to onsite workers, you may also risk your productivity with an unmotivated work-from-home employee. A hybrid worker may present the best of both worlds. It’s all about being smart about the money you currently have for expanding your workforce and making the best possible investment in the people you hire.
Tailor your recruitment efforts to the requirements of the roles you need to fill, communicating the specific needs of your business to interested applicants. Use various recruitment methods, including leveraging online platforms like social media and jobseeker sites, as well as referral incentives.
5) Establish an Onboarding and Training Program
Upon hiring new employees, it’s crucial to set them up for success through effective onboarding and training practices. Use part of your loan to develop a structured onboarding process to introduce new hires to your company culture, values, and expectations. Then, provide comprehensive training to equip employees with the skills and knowledge they need to excel in their roles.
Say you’ve hired a new sales associate for your retail store. They can participate in orientation sessions where they learn about the store’s history, mission, and customer service philosophy. After this introduction, the sales associate should undergo product training, sales techniques workshops, and customer interaction simulations.
The investment of time and resources in your company’s onboarding and training procedures will ensure that new employees will be empowered to fulfill their roles and responsibilities to your company. That, then, makes the investment worth it.
6) Measure Employee Performance
Again, you may spend a significant amount of money to add another person to your workforce. That makes it all the more crucial to track the performance of new hires to ensure optimal returns from your loan funds.
Establish key performance indicators (KPIs) to monitor their effectiveness and impact on your business. While KPIs will not be the same for all businesses, some basic examples that count for most are time to productivity, quality of work, customer satisfaction, and employee retention.
It may be especially nerve-wracking for a small business owner like you to take on a business loan, especially if you’re just starting out and are used to working with a small team. But through the tips listed above, you’ll have a plan for utilizing your business loan effectively and hiring the kind of talent that will position your company for long-term prosperity.