Strategic Planning: How do you Decide When to Hire Support Staff?

This is a question that bedevils many agents and advisors. And for very good reason. This decision is either a very costly mistake or a required investment for moving forward. But how do you know if you’re making the right decision?

It comes down to knowing your numbers and what you want from the person you’re planning to hire. Before you even get into the numbers you have to know what the person you’ll be hiring will be expected to produce in terms of results. Do you need someone who will do your marketing for you, someone who will actually do the selling in addition to or instead of you, someone who will perform administrative tasks, or someone responsible for customer follow-up and customer service?

Evaluate the things you are doing now. The best way to know rather than guess is to actually track the amount of time you’re spending on: marketing, sales, administration, and customer follow-up and customer service. An easy way to do this is to note the time you start and end each task along with the type of task performed. If you get interrupted end the task and note the time. You aren’t tracking completion time you’re tracking total time invested in each area each day for a week. I know this sounds tedious, but it is well worth the investment. Not only will you know how much time you are spending on each of these key areas you may find out how much time you’re spending on things that really aren’t a good investment of your time. When there is travel time included in a task include that too.

Tally up each area for the week. Now you know the total time invested in marketing, sales, administration, and customer service for a typical week. With that information you can begin to determine what tasks you want to delegate to the new person you want to hire and how much time this person would spend on each task. This will help you to clearly know if you need a part-time person or a full time person. Now the next critical question for you to ask yourself is, “if the person I hire is doing these things what will I be doing with the time freed up in my schedule”. Usually that time needs to be reallocated to a revenue generating activity or activities.

There are three sets of numbers you need to have before you can make a hiring decision. After identifying what you want the person you hire to do and how much time it will take and how much revenue generating time that will free up you have some more data you need to gather. It’s a good idea for you to start tracking these numbers now because you will need them to make future hiring decisions too.

• The first number you need to know, not guess, is how many man-hours are required on a weekly basis to take care of the needs of existing customers. You’ll have to go for an average now and then track this information so you’ll always have that average available. This is an important number for two reasons. It’s good to know for hiring decisions, but it’s also a good indicator that you may be taking on the wrong kind of clients if this number is too high in relation to income potential. Add up the number of hours you intend to spend each week taking care of existing customers and the number of hours you intend the person you hire to spend on taking care of existing customers and you have the number of man-hours available on a weekly basis to take care of existing customers. When you have the total man-hours required to take care of existing customers you can then calculate the number of man-hours needed per existing customer.
• Then you need to calculate the labor costs per existing customer each week.
• Now you need to add up your portion of the revenue from all your existing customers to calculate your net income per existing customer. This is can be used as a predictor number for the potential income you can expect to obtain from the new customers you intend to get after you hire a support person.

Now you know what you need to know to make a hiring decision. When you decide to hire a person you know that initially their salary will come directly out of your profits. But with this information you now know the points when the man-hours needed exceed the number available, the number of new customers it will take to pay for this person, and the amount of time you can free up to obtain those new customers. Once you hire that person their salary becomes part of your fixed costs and directly increases your break-even point each and every month. Make sure you have the customer base and the potential for new customers each month to merit the expense.

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