This is part II in our series on how to create meaningful year-end planning for your small business. This week’s focus? How to plan for staffing during the year.
Last week, we talked about how to plan for growth, so let’s skip ahead a little bit and create a goal so that we can better understand these steps with a real world example.
Let's say your goal for your business is to achieve $500,000 in new revenue, which essentially means acquiring 60 new clients. With a 20% success rate, that would mean generating 300 leads. That’s a lot of work! So let’s see what we’d need for staffing.
1. Assess Your Current Team
Before diving into any staffing decisions, it's crucial to evaluate your existing team. These are the folks who have gotten you this far. Ask yourself questions like:
Do we have the right team in place to acquire those new clients, especially in sales and marketing? Can our current team effectively handle the workload required to meet our growth goals?
You may love your team – that’s awesome! Assess what works AND what you’d potentially like to see changed. Will you need more admins? More folks on the sales team? Let’s think about how we might get there.
2. Analyze Last Year’s Data
How much did your current team create in revenue in the last year? Be realistic. Can they create more growth on top of that? Maybe, but it’s more likely that you’ll end up having to hire more members for your team to handle any sort of meaningful growth.
To determine if your current team can handle the increased workload, look at historical data. For instance, if your sales team can typically close 40 deals per year per salesperson, you'll need to close an additional number of sales across the team to reach 60 new deals. Perhaps that’s possible, but we wouldn’t say it’s likely. Figure out from there how many sales folks you’ll need. Let’s say one in this case.
3. Consider Your Recruitment Cycle
When it comes to hiring additional staff, timing is essential. Consider if it takes around 90 days from the start of a job search to bring a new employee on board…if you need someone to start on January 1st, you should initiate the hiring process well in advance.
There are also extenuating circumstances that may be industry-specific. Take, for example, a CPA firm. We do a lot of work between January and April, so it might be best to schedule those needs for May or the summer, and oftentimes those working in that industry won’t be looking during that time of the year. That’s the advantage of planning end of year, not everything has to start in January.
4. Plan for some Client Attrition
While you aim to acquire 60 new clients, it's essential to consider client attrition when it comes to determining your staffing needs. People leave. It’s OK! Clients may leave for various reasons, such as closing their businesses or seeking services elsewhere. In a good year, that might be just a couple of percentage points, but you’ll need to to absorb the impact of client attrition —assess your current capacity in different teams, including project managers, account managers, and administrative staff.
From there, you’ll have a better answer as to how many team members you’ll ACTUALLY need.
5. Anticipate Staff Attrition
Related: You may lose some staff year-to-year. Staff attrition is a natural occurrence as businesses grow. Smaller businesses may experience turnover every couple of years, while larger organizations may see it annually (and in larger numbers). Planning for staff attrition should be a built-in part of your staffing strategy.
6. Consider Acquisitions – but Have Enough Runway to Make it Successful
If your growth strategy includes acquisitions, remember that you may need to hire additional staff or redistribute existing resources to absorb the workload from the acquired businesses. Consider not only the cost of acquisition but also the cost of integrating new staff.
Acquisitions like this represent a huge opportunity for meaningful growth, but they also are a significant investment of time and capital to make sure they work. Don’t expect to turn a profit the first year, in some cases it can take 3-4 years to see results from an acquisition.
If you have more questions, speak to a financial professional! We help businesses create plans like this all the time, and we can say one thing with certainty: failure to plan is a plan to fail! Start 2024 off right by making sure your plan is realistic, executable, and creates sustainable growth.
Want to talk? We’d love to have a no pressure meeting.