A small business owner has a decision to make. Overtime has climbed for the third month in a row, and the team is stretched. Adding another employee could ease the workload, but it also means adding to payroll at a time when cash flow needs to be watched closely.
It’s tempting to look at the payroll total and ask whether the business can afford another employee. A better starting point, ADP advises, is to understand what’s behind the higher labor costs.
Are the same employees consistently working extra hours? Are certain shifts difficult to cover? Has the business taken on more work? Is revenue growing at the same pace as payroll? The answers can tell a very different story about whether another hire makes sense or whether the business needs to rethink how work is getting done.
This is where financial visibility becomes especially valuable for small businesses….
