Expanding your team is an exhilarating milestone for any fledgling business. However, with average per hire costs reaching $4,700 in the US, hiring new employees represents a major investment for small business owners on tight budgets.
In my 10+ years advising startups and SMBs on strategic hiring, I’ve helped countless entrepreneurs navigate this crucial process. In this comprehensive guide tailored to small business needs, I’ll break down everything you need to budget for new hires in 2024.
Average Cost Per Hire by Position Level
While $4,700 reflects the overall average, costs vary significantly depending on the seniority of the open role:
| Position | Average Cost Per Hire |
|---|---|
| Executive | $14,936 |
| Manager | $8,359 |
| Non-Manager | $4,129 |
Small teams see even bigger proportional impact. Adding an executive can consume over 1/3 of an early-stage payroll budget. Carefully weigh long-term growth strategies before committing to executive-level hires.
Small Businesses Pay More Per Hire
Companies with under 50 employees face disproportionately high hiring costs due to limited budgets and HR bandwidth challenges:
Consider leveraging your professional network for referrals before paying for job board advertisements and agency fees.
It Takes Months for New Staff to Hit Maximum Productivity
While employment gaps cost you money, reducing hiring speed can pay dividends:
| Ramp-Up Time | Productivity Level |
|---|---|
| 1 week | 25% |
| 1 month | 50% |
| 3 months | 75% |
| 6+ months | 100% |
Balance quality and cost by determining the ideal staffing level for operational needs before paying premium rates for short-term contract workers.
As you can see from the data, bringing new hires up to speed requires significant management investment. Before adding headcount, make sure your current team has the bandwidth to train new employees.
The Bottom Line
Hiring plays a key role in growing your small business. But with so many variables impacting your budget, developing a strategic plan is crucial. Don‘t hesitate to reach out to my team for help analyzing your hiring and training costs. With an in-depth approach, we can control recruiting expenses and set your newest employees up for success.
