Growing a business can mean growing a team. Hiring a new employee—especially the first—is an exciting milestone for a small business. Knowing why, when, who, and how to hire depends on many factors, including your business area and goals. We have a few tips to help you make the right moves.
Why hire
Understandably, business owners feel protective of their small businesses. So much time, energy, effort, and money go into starting a small business, and some business owners feel like they’re the only ones who can do it. That may feel true, but it’s also exhausting and often counterproductive!
Hiring helps you delegate tasks, bring in new ideas and energy, focus on the tasks and responsibilities you most enjoy, and get more done. It can feel like a big leap. When you’re ready, hiring can also help your business grow, develop your leadership skills, and prevent burnout.
When to hire
Many successful entrepreneurs across industries recommend hiring as soon as possible —building a team as soon as you can afford it.
What does “afford it” mean? It may mean pursuing funding or a business loan and using some of those funds for hires. Whether you go that route or not, be sure you have consistent revenue to pay your debts or to pay your new employees directly. Hiring is a good option when it will allow you to make and save more money and time. Look to fill gaps in your skill set or knowledge base. A skilled employee may do those things faster and better.
A good rule of thumb is to ensure your business is bringing in 3-4x the monthly salary of your potential employee. That’s because it will take time, sometimes 6-9 months or more, for an employee to onboard, train, and begin having their efforts pay for themselves—and more! You’ll want to hire after you’re too busy to take on new demands or requests but before you find yourself missing deadlines or providing customer service at a lower level than you want.
Who to hire
When it comes time to hire, you want to bring on someone who makes your company money or saves you money. Consider if a full-time or part-time employee is both feasible and needed. You can also consider if the person you’re hiring needs to be in person or can be remote. You might hire someone junior who increases your bandwidth on products or services. You’ll also gain the opportunity to mentor!
You might hire someone to manage business operations tasks, such as a bookkeeper or someone dedicated to developing new businesses.
To expand your offerings, hire someone specializing in a related skill or providing a lateral service. For example, a graphic designer may employ a web developer to offer complete website packages.
How to hire
Bringing in a first employee works best when you have thought through how to make them successful. Onboarding, knowledge-sharing, key outcomes, and evaluation—the systems and processes of work—help an employee understand and succeed at what’s expected. Stay flexible—maintain high expectations of results but also be willing to see how things can be done differently than you might do to achieve the results.
While you may have a vision for where your company could go and grow, hiring requires defining and tending to your internal values. Building a company culture starts with these first hires, and a great culture helps you attract great applicants. You can do some of this values and culture work before you hire, and it will evolve and shift with a small team and, if you grow more, a larger employee population.
Create defined and specific responsibilities in the job listing. Even if you’re feeling swamped—you’re hiring to help alleviate that, after all—take the time to delineate the role, or you’ll be paying someone to hang around while you figure it out.
Your employee will benefit from knowing what to do day-to-day and week-to-week. Beyond specific duties for the employee, now is a great time to codify your standard operating procedures (SOP) across your business. This will benefit your first hire and all future hires!
Other considerations
While you may be able to afford a full-time employee's salary, you'll also need to factor in the rules around benefits for full-time employees like paid sick leave, family and medical leave, workers' comp, and more. It's important to understand what your state and also federal laws define as full-time work. The Affordable Care Act (ACA) deems 30 hours or more full-time and eligible for benefits.
If you’re ready to talk about your business’s next steps, reach out to speak with a Fremont Bank business banking expert.
