Many entrepreneurs see staffing as an expense. But do you know what’s far more expensive than hiring the right talent? Relying on the wrong employees to fuel your brand’s growth.
How did I learn this? I went away for the weekend, only to find that the employee in charge of answering emails replied to a customer inquiry with the following sentence. “Sorry, the item you asked about is out of stock. Hope you manage to find what you need.” Mind you, this was not just a big-ticket item. But we had several excellent alternatives in stock. Plus, being a small business, we needed every single sale we could get.
In other words, staffing isn’t just an investment in your business, but an insurance policy, allowing you to maximize your brand’s potential.
Are you searching for tips on how to allocate capital for talent in your business? Here’s everything you need to know about strategic hiring, making the right staffing decisions, and using talent as a powerful growth accelerator.
Staffing: Investment or Expense?
The average cost to hire an employee — at least in the US — reached $4,700 in 2022. Sure, that may seem a lot when you’re on a tight budget.
However, before you decide that staffing is not an expense you’re willing to take on, consider Gallup’s findings. According to the organization, making poor hiring decisions, particularly when coupled with poor management practices, directly leads to disengagement. In 2023, the losses due to disengaged employees reached a whopping $8.8 trillion, equivalent to 9% of global GDP.
In other words, if you’re looking to protect your budget from unwanted expenses, you have to stop viewing staffing as a category where your business is “losing” money.
Instead, reframe your mindset and start viewing hiring for what it truly is — a unique opportunity to create profits through the value of high-quality employees.
Yes, the returns may be more difficult to calculate. But there’s plenty of data to suggest that hiring is an investment, not an expense.
In 2024, research found that higher levels of employee engagement led to a 10% increase in customer loyalty, a 23% boost in profitability, and 18% higher sales productivity. So, if your business growth goals align with these results, it’s worth exploring ways to allocate capital to talent acquisition.
Prioritizing Talent Areas: Key Investments to Make Early On
Hiring decisions with a high ROI potential start with strategic planning.
After all, it’s not enough to expand your team. Instead, you have to identify key roles and talent areas that will allow your organization to operate more effectively.
Depending on what your business does, there are different foundational hires you need to facilitate growth.
- For example, Zendesk found that 81% of consumers are likely to repurchase from brands following a positive customer service experience.
- Or, if you look at data from 2025, you’ll find that 74% of high-performing content marketing teams successfully generate demand and leads, nurture subscribers, build loyalty, and elevate sales.
- How about your design team? Forrester’s research suggests that every $1 invested in UX design generates $100 in returns.
Of course, these are just a few force multiplier factors when it comes to staffing. In many cases, your ROI might not be monetary. Nevertheless, the impact of your hiring decisions could make or break your brand’s growth potential.
Operations managers, HR professionals, and executive assistants can all free up a solid chunk of your valuable time. So, yes, hiring them may come at a cost. Nevertheless, these roles are crucial for allowing you to invest your energy toward business activities to propel business expansion (instead of wasting time and resources on trying to handle the aspects of running and marketing a business that are not your forte).
When hiring for these key talent areas, the budget-conscious entrepreneur in you might be tempted to approach the staffing process without professional assistance.
However, employing critical roles requires expertise and experience, so it’s not a bad idea to outsource your staffing investments. For instance, if you’re after a superstar, one of these top executive assistant recruitment agencies will allow you to access exclusive talent, assess candidates, and cut costs without compromising on the quality of service.
In-House or Outsource Talent? Finding the Right Balance
There’s very little doubt that staffing is an investment in the future of your business. But when deciding to bring on new employees, you’ll need to choose between in-house vs. outsourced talent.
Both of these options have their advantages. Nevertheless, both come with challenges as well.
A good rule of thumb is to hire full-time employees for the most valuable positions within your organization. Depending on what type of business you own, these may differ widely. However, any role related to business strategy, branding, and development will generally fall into this category.
On the other hand, outsourcing can also make a lot of sense when attempting to put together a strong team while keeping within budget constraints.
For starters, this is true because you can pay these contractors on an as-needed basis. Furthermore, hiring talent globally unlocks additional opportunities to cut costs. Moreover, you can quickly scale your outsourced team without tying yourself down by long-term commitments.
All of these are strong pros when working with limited capital, especially during the initial growth phases of a business. However, there are some disadvantages of outsourcing critical work to contractors, including a lack of control and low security.
When approaching staffing with an investment mindset, your long-term goal should always be to create a strong, trustworthy team that will lead your startup to future successes. You need to strike the right balance between hiring for cost-effectiveness vs. hiring for culture fit and vision alignment.
Hybrid staffing models are an excellent solution for most small businesses because they allow you to create a core team of in-house experts, while still ensuring the highest possible quality of work for tasks that don’t (yet) require full-time handling.
Remote Talent as a Flexible, Scalable Investment
Another option to explore when seeking talent to grow your business is to hire remote employees.
This model offers numerous advantages, especially when working against budget constraints. Whether you need customer support representatives, developers, accountants, marketers, or a competent virtual assistant, chances are that you can find an exceptionally talented candidate if you’re open to remote hiring.
But the best part is that remote hiring allows you to bring on competent and experienced talent to your team while staying on budget.
Additionally, this staffing model helps you access a more global talent pool, a tremendous asset for startups operating in industries like SaaS or ecommerce. Moreover, with a dispersed team, your brand can easily capitalize on asynchronous work, which is particularly beneficial for customer support and sales teams targeting global customers.
If this type of flexibility and scalability is something you find attractive, the best thing to do is to collaborate with some great remote staffing agencies. This will allow you to reap all the benefits of remote hiring, including the cost savings. It will also provide you with a much-needed level of security, as many reputable agencies offer perfect-hire guarantees that include finding replacements for underperforming employees for free.
Allocating Capital: How to Budget for Talent-Driven Growth
So, you’ve decided to invest in your brand’s future and to do it through staffing. The question that naturally poses itself is how you should go about allocating capital.
Naturally, this complex question requires a not-so-straightforward answer.
For starters, this is because the cost of hiring isn’t just about how much you’ll spend on employees’ salaries and benefits.
You also need to account for the remaining funds that you’ll have to spend on onboarding, training, and supporting new hires. According to Preppio, this can range anywhere from 30% to 70% of a worker’s annual salary, which is far from being a small sum.
So, how do you protect your cash flow when staffing, while still securing skillful talent for your team? It hugely depends on your industry.
For instance, staffing costs in the ecommerce industry tend to be much lower than those for, say, service or tech brands. Nevertheless, just because you don’t have to spend as much on employees, doesn’t mean that you shouldn’t prioritize expertise and culture fit.
A good rule of thumb is to allocate at least 50% of your total revenue to staffing. For early-stage startups, this will need to be higher (up to 75% or 80%). However, as your business matures and becomes profitable, you’ll find that you have a much more comfortable cash flow.
Staffing Investments ROI: Tracking Data & Using It for Future Strategizing
A great investment necessitates a strategic approach. And the only way to develop an effective staffing plan is to measure your ROI by tracking the right KPIs.
So, how do you decide whether your hiring decisions were right for your business’s growth potential?
Start by identifying the right recruitment metrics for your brand and growth goals.
For example, employee productivity, revenue, engagement, retention rates, etc., are all excellent indicators of whether you’ve made the right call.
Additionally, it’s a good idea to consult with your clients and measure their satisfaction with the service received when dealing with your brand. You can also get a feel for this by looking at customer churn rates and seeing if they’ve lowered since bringing on new staff members.
Furthermore, don’t underestimate the non-measurable signs of hiring success, such as employee satisfaction or company culture.
Finally, explore how each hire impacts your professional routine and whether it affects your cognitive and emotional capacity to focus on high-value tasks in running your business. If they’ve made a positive impact on freeing up your energy to do more valuable work, then they’re definitely an asset, not just an expense.
Final Thoughts
When trying to grow your business into a profitable entity, talent isn’t a cost. It’s a valuable asset that can help or prevent you from reaching your goals. That’s why it’s important to allocate the right budget and resources to finding the right people to work for your brand.
With this in mind, staffing isn’t an operational expense. Instead, it’s an investment in the future of your startup.
As a founder, you know you have to think proactively about securing the right talent for your business. But it’s just as important to keep them happy (seeing as employee satisfaction directly affects productivity). For this reason, it’s not a bad idea to consider getting some help with the staffing process. That way, you’ll get skilled individuals on your team while still ensuring a solid culture fit.
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