Before recruiting an employee, you must know certain thresholds, such as the volume of customers that your company can achieve with its current workforce or the minimum turnover that the employee you will hire will have to bring you, but certain events require hire in all cases, on fixed-term or permanent contracts.
For a VSE / SME, hiring staff is a bet on the future. The financial risk seems all the greater when the company is in its infancy and recruits its first employee. What are the factors to consider before taking the plunge? Finally, why recruit?
Why recruit for your small business?
Hiring an employee in your small business can be essential from the start of the activity. If you’re opening a restaurant, for example, you’ll need kitchen and waiter labor immediately.
In other sectors, you can evolve alone. It is then the increase in customers that will force you to recruit, because you will no longer be able to meet demand within a reasonable time or simply free up time to prospect and take on additional customers. In this case, the company has reached a threshold corresponding to the maximum turnover that it can achieve with its current workforce.
Finally, other companies believe they have to hire an employee due to a lack of a crucial skill within their team, or as part of the development of a new product or service offer.
When to hire an employee?
The right time to hire an employee is when your company has enough financial visibility to cover the cost of its personnel. You must first assess the amount of your financial cushion dedicated to staff compensation and anticipate the number of months of salaries and social security contributions that this represents. Then consider the additional turnover to be achieved (in the short or medium term) to cover the cost of the employee (including social security contributions).
Ultimately, whoever you hire will need to leverage to generate additional revenue . This could be the case since this person will free up your time to prospect more.
Financial forecasts to anticipate your first recruitment
In order not to be caught off guard, you will need to know your thresholds before starting your business . By carrying out a business plan and financial forecasts with the help of a chartered accountant, you will be able to anticipate from what volume of customers or what amount of turnover you will no longer be able to cope with alone. You will also know what volume of customers or what amount of turnover your employee will have to bring you for the operation to be profitable. You will only have to monitor your cash flow and your activity in real time to realize whether you have reached these thresholds imminently (or not).
When to hire an employee on a fixed-term contract?
Certain seasonal activities require the hiring of staff for short periods. Other companies do not have sufficient financial visibility to hire on a permanent contract (CDI). To minimize the risk associated with long-term recruitment, you can use the Fixed-Term Contract (CDD) to deal with a one-off or uncertain increase in customer demand.
Other employment contracts that are more flexible than the CDI exist, such as using a trainee or a temporary agency. Please note that temporary work is generally more expensive than hiring; this approach is therefore reserved for rapid and short-term needs.
Recruit or outsource?
To avoid increasing your fixed costs, you can subcontract the realization of part of your activity, but this approach can be risky, because the skills used are not part of your company. Your subcontractor could discreetly pick up your customers!
In any case, we advise you to call on your accountant to consider the most appropriate employment contract for your activity and above all, to validate that it is high time for your company to grow and recruit an employee.
