As your business grows, the likelihood that you will be able to continue to “do it all” and still expand are slim. At some point, you have to add additional staff. However, determining if it’s a sound financial decision may be a little more difficult. After all, you want to ensure that you will receive a positive return on investment from adding that position.
To calculate your return on investment, you must first assign dollar values to benefits you expect to receive by adding this position. In a calendar year, how much revenue will be directly generated as a result of this position? How much money will you save by the increased efficiency of adding another individual? Will you gain other benefits such as productivity, quality, or better customer service? Whatever the benefits may be, assign an amount to it.
After you have determined a total dollar amount of your benefits, assign dollar values to the costs associated with adding this position. Be sure to include all costs, not just salary, taxes, health insurance (if offered), etc. You need to also consider any costs associated with hiring (advertising), training, travel, relocation, etc.
Once you have totaled your costs, you can compare those to the benefits and determine if adding a new position would be a good investment.