How to Manage Your Business’ Finances when Considering Employee’s Wages

| November 22, 2013 | 0 Comments

Deal with employees wages

Anyone who has ever started a business will most likely tell you that it is the most difficult but rewarding experience of their life. All that being said: the first month of your business is all about you. Looking back on it several years from now, you’ll most likely find that it was a piece of cake, compared to your biggest challenge: hiring your first employee, and figuring out his or her worth.

Hopefully, you’re profitable at this point. And if you’re not, then you should seriously consider whether or not you require this employee. When you’re already in the red, adding more costs is just going to put you farther into that red, so maybe it is not necessary. For some industries, though, like restaurants or other large organizations and franchises, you may have to hire dozens of employees a month or two before you even open your doors. So don’t freak out about hiring while not making money – you just have to be extra careful when doing it.

The biggest decision, when you begin hiring employees, is how much you want to pay them. You have several options here, and it’ll be wise to consider all of them. Perhaps you’re a tech start-up, with a lot of risk and a lot of reward. Then it’ll be key for you to realize that you likely won’t have revenues for a while, so perhaps a partnership where the new employee gets a percentage of the company in return will be a great idea. But be warned – if you do happen to become an internet superstar, that 1% or 2% you just gave away could be worth millions. Other organizations will likely have less exciting, but just as important conversations about wage laws – understanding everything from health care requirements to minimum wage rules and regulations. It would be a wise decision to call a wage lawyer at some point during your process, to ensure that you’re actually following the laws. It’s really a horrible day when you do a massive amount of work, only to find out it could potentially get you arrested!

Another thing to consider is your company’s culture. If you provide your employees with a massive amount of benefits, like great health care, or a friendly environment, or perhaps a paid lunch break – those expenses could actually save you money in the long run. Yes – paying for your employee’s Chinese food on Fridays sounds like a waste of time and company worth. But if your employees become happier, they’ll work harder for you. And they’ll also stay at the company longer. Anyone who has had to do a massive hiring job realizes that every time an employee leaves and organization, there is a massive amount of work that has to go on behind the scenes to replace them. Everyone from their managers, to those working under them, to workers compensation attorneys and your human resources department will most likely have to have a say in the matter.

For your best bet, simply pay your employees living wages, which they deserve. It’ll be a great first step in helping grow your company into the business you want it to be!

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Category: Finance

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