Every entrepreneur who gets exhausted and stressed believes he needs a hand to help him run the business. It is believed that the addition of an employee will cut down the work hours as well as get out time to be spent on other higher-level tasks such as focusing on the growth of the business.
However, the common misconception that being busy means you need an employee is not enough. Hiring employees is a vital step that should only be taken when certain conditions arise. Building up a team to run the company needs to be based on strategy, and it should be prudently planned well in advance. The day you start your business is the day you should start planning about when to hire your first employee. In this way, you will stay on the right track and timeline without making any hiring mistakes.
It is still not easy to know when it is the right time to hire an employee even if you had planned it in advance. There are several stages that arise in the business and situations where you would have to hire someone. We will be looking into these stages and situation but before that let’s have a look at when not to hire an employee.
It is essential to know when not to hire for the betterment and healthy growth of your business. The not hiring points include:
When you are desperate
It is seldom that business owners make their first hire in times of desperation or heat of the moment. When the work you have on your plates seems more than you can handle. You should know that all decisions made in haste and desperation are mostly not so good ones.
You are ill-informed about what you want from the employee
This is another point that you must keep in mind when hiring. There are instances in the business where you will realize that you need help. However, you won’t know what exactly you need help with and how. So, until and unless you are absolutely or even slight sure about the responsibilities you want to put on the new hire, don’t do it. You need to figure out your expectations for the new employee. The new hire will be as confused as you are if you are not sure about your expectations of them.
You are willing to take the first person you come across
If you are one of the luckiest people on this planet, then the first person you come across will be exactly who you require. Their skillset will best suit your needs and take your business to a whole new level. However, being practical, this does not happen 99% of the time. So, you should consider more than one person and interview as much as you can to get the best out of all.
These were the basic points that you should keep in mind to know when not to hire your first employee. Now let’s dig into all the stages and conditions when you should make that first hire.
When you are able to write a full job description
Once you have decided to hire your first employee, the first thing that you need to do if to work on a full job description. The job description will not only help the employee in understanding his responsibilities but help you as well. If you do this task before hiring the first employee, you would be able to figure out whether you actually need one or not. If you can’t draw out a job description that includes work that requires around 8 hours every day for the whole week, then it is a bad decision to hire someone full time. So, you would get the answer to whether there is enough work for someone to complete their 40 hours a week or will you be just paying them for sitting on a desk.
When you are turning down new clients and work
There will come many stages in your business when you would find yourself trying to walk on water. Situations get really tough when you try to shift to the next level. Taking on new clients and work is the ultimate goal, but you will reach your full potential when you have associated with a number of clients. At this point, you will feel the need to either go beyond your potential, which does not produce good results mostly, or hire someone. If you ever want to grow, you are going to have to have people working with you since with growth, the workload increases.
When you are adamant that a new employee will generate money
Hiring an employee means you would have to pay them. Paying them adds to the overall cost of running the business. A monthly salary might not sound much, but annually it adds to a pretty good amount. However, before deciding to make this investment, you need to be sure about whether the employee will be generating more money for the business or not. If the return on this investment is more than the actual cost, then go for your first employee.
It is believed that employees are hired for only two purposes: either to generate money or to save money. If you are somehow sure that the employee you hire will be able to do either of the two, hire one. During the birth period of a business, generating money is the priority since there is not much money to save. Here is a small list of things to give you an idea about which things will generate money and if the need for them occurs, you should hire:
- Creating the product (developers, designers, etc.)
- Marketing the product (content marketers, growth hackers, etc.)
- Supporting the product (help desk, customer support, etc.)
When you require specialized skills
When you start your business, maybe all the skills that you require come with you. However, that still does not mean that you can be the boss of everything. Yes, you are the ultimate boss, but you won’t have the skill set to handle everything that goes around the business. There are departments in a business that might require specialized skills. For instance, a graphic design business will need someone who holds expertise in user experience. When your business comes to a point where you need to make it more professional in a relevant department, then hire someone with the relevant skillset.
When you are losing clients
Working alone in the initial stages works well for most. However, over time, you will find yourself handling customer service calls, meanwhile dealing with everything else. When this starts to happen, you might miss out on some deadlines. Complaints will start to knock at your door, and it is never a good sign. In this bad phase, if you end up losing a client, it could cost you more than the salary of hiring an employee. Moreover, one thing worse than losing a client is a client who tells others. Consequently, yours and the business’s reputation will be impacted.
So, make sure that the workload you have onboard is enough for you to handle. If you cannot, then it is a sign that hiring an employee is necessary. Hiring someone is no small thing either but not doing it at the right time can make things more difficult for you. Therefore, it is vital to keep the focus on your own workload and simultaneously look for someone as the workload increases.
Start by hiring a contractor
If you are unsure about whether it is the right time to hire, then it is recommended not to hire. However, if you are unsure about what exactly you need someone for, but there is a need for a helping hand then test it. Rather than hiring a full-time employee, hire them on contract. A contractor will put you in much less difficulty than hiring a full-time employee. Look for a contractor that somehow falls in the skill set of what you require. Then sign a contract with them for a few months or even a year. Make sure to look for answers for the following questions during the contractor’s time with you:
- Whether the contractor is helping the company grow and earn or holding it back?
- Whether the position of the contractor is required on a long term basis or not?
Does the business require more?
Begin with a co-founder
Being a solo entrepreneur, one is always looking to get to the next level. However, doing this alone is sometimes not possible as you are way down the road in the business. When you are at a later stage in the business, hiring an employee seems intimidating. In such situations, look for a co-founder. If you can’t find a co-founder, then hire someone who has the co-founder potential in them and mentally believe them that they are. A co-founder will help you grow and prosper with the following skills:
- Complementary skills
- Similar vision and values
- Passion or energy
- Emotional intelligence
When making your first hire, a co-founder hiring mentality is vital. You will have one of the longest and most solid relationships based on trust with your first employee. Looking at them as the potential co-founder will help you appreciate them and in return, give them an incentive to work harder for you.
Steps to follow when looking to hire your first employee
To reach to the best first employee, follow the following crucial steps:
Step 1 – The role
As discussed earlier, when finding someone to hire, it is essential that you define the role for them. It is extremely important to dictate to the employee all of your expectations. In this way, you both can keep track of what is required and at what stage. It is also important to be specific about your requirements but also to leave some space for them to adjust and grow with the business. A good method to know whether you are ready for an employee is to list down all the tasks you have for them in a week. If they add up to more than 20 hours of work, then you are ready to hire.
Step 2 – The procedure
Once you are done defining the role of the job to the employee, the next step is to derive a procedure for all the roles created. The next step will be to document the whole procedure. Moreover, you should design a list of the hiring process and the standards you are looking for. in this way you will be able to advertise the position in the best way possible and treat all the potential candidates with fairness. It is important to give it to the employee and refer to it yourself.
Step 3 – Check your budget
Checking your budget before bringing in an employee is very crucial. You need to figure out how much time you will be saving once the employee starts and how much this time will earn you. Your role will change as well with the new employee, so you need to reconsider it beforehand. Figure out how to manage the funds to pay them as wages and establish the amount so that you can make an offer to them.
Step 4 – Advertise
Whenever you start looking for someone to hire, the standard procedure is to advertise. Put out an advert in the local newspaper and job centres to reach out to potential people with skills. However, in the age of social media, people look for everything on these platforms. So make sure you put out an advertisement on your website and all of your personal social media accounts. Another good way to reach potential candidates is to talk to the companies you work with and anyone else who might be in the relevant market. Make sure you convey the details about the job requirement and the procedure to apply and the deadline for submission.
Step 5 – Sorting and interviewing
This is the tiring yet fun part. After the advertisements and giving the word out, you will start receiving applications. Now, you don’t have to select them all for the interview. Generally, go through them and sort them out according to their potential. Dismiss the ones that have nothing relevant to what you are looking for. It is also important to verify whether people actually read the terms in your advertisement. For this, you can add a trick question in the advertisement, such as asking candidates to begin the application in a certain way.
After sorting out candidates based on their applications and the mentioned skills on paper, you start with the interview phase. In the interview phase, you have the opportunity to test their aptitude and skills. Plan out a small and similar task to what they will be doing at the job. Ask them to do it. In this way, you can reach to their actual potential and skill because some people are just good at answering questions.
Step 6 – Hiring
The step that you have been waiting for. After interviewing a bunch of potential candidates, you hire the one that deems the most suitable. Before hiring, prepare a contract and add you terms and conditions. Having a formal contract on an official document is professional, and it will make the employee feel like a part of the team. It is also important to dictate the legal standing of employment.
Step 7 – Know your role
Hiring someone means that your own role in handling matters will change. At first, it was just you, and you have grown as a sole worker. Now things have changed, and there is a new challenge at hand. Now you can be either a hard boss or a friendly one. It depends on you and the kind of job you have for the employee. However, being a nice boss won’t hurt as long as the employee is listening and doing their work fine. Being nice also keeps employees happy, and this adds to their productivity.
Step 8 – The first day
Once you are done with all the official paperwork and legal requirement, the employee will start working with you. The new hire will require a sort of orientation on their first day and information about how things work in the business. Once you have explained to them, they take it from there.
The Bottom Line
When you hire your first employee, or even second or third, it is essential to put them on a probationary period. The probationary period enables you as well as them to end the contract without having to go through any trouble. In this period, both of you will be able to figure out if you can work as a group or team or whether you need to change how things work or not work with each other at all.
Like running the business is a risk, so is hiring an employee. You have to put your trust in someone’s ability to cope with you and the business. Firing your first employee is never a good sight. So, make sure you prepare for beforehand by following all the steps to keep away from any undesirable scenarios.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning.