Your company’s early hires have the potential to shape your business. They can improve operational capacity and efficiency while freeing you to focus on the work that builds value. So, while the hiring process can be difficult and daunting, it is also necessary to grow your business. In this blog post, we’ll answer some frequently asked questions, outline considerations for those hiring during the early growth stages, and provide tips for avoiding common issues:
When should your business hire its first employee?
The answer to this question is specific to each business. Some businesses can operate with just the founder at the helm until it’s profitable; others will need to hire almost immediately.
Instead, it’s better to focus on how your business can hire strategically to stimulate growth.
Businesses that hire strategically understand the costs of hiring and consider which employees can make the most impact. To achieve this, they ask and answer the following strategic questions:
Questions to Ask Before Hiring Your First Employees
Can your business afford to hire its first employees?
Your business will first need cash reserves and/or the cash flow required to pay its early employees. It can also be beneficial to have some runaway to allow your business to pay its early employees if cash flow is slow or interrupted.
The costs associated with each hire include their wage (as a full-time, part-time or casual employee), superannuation, benefits (if any), the costs of payroll, and recruitment costs.
But, there are many costs associated with hiring your early employees that aren’t immediately obvious. Consider, for example, the costs of:
- Hiring a lawyer or HR professional to draft employee contracts,
- Producing training courses or materials and providing in-house training,
- Worker’s compensation insurance,
- Supervising and managing the employees, and
- Uniforms and other equipment.
Which employee will most benefit your business?
As a business owner, you will know when you’re running out of capacity to manage your daily operations. For instance, you might be significantly behind on your bookkeeping or it may be more of a production role you are looking for.
By working out which elements of your business you most need help with, you’re in a better position to determine:
Whether you should hire a contractor or an employee; and
Some elements of your business are better served by consultants and contractors in the early days, while employees best achieve others. The simplest way to determine whether to hire a consulting firm or an employee is to determine the scope of the role. Let’s look at marketing and social media as an example:
It may be best to hire an agency if you need assistance developing blog posts and your website, publishing Google Ads, improving your website’s SEO, and posting a few times a week to social media. These tasks all involve a wide range of skills, and it may be more cost-effective to hire an agency than to hire a marketer with this wide range of skills and experience.
We’ve discussed a similar scenario involving hiring a virtual CFO in an earlier post. Read it here.
If you hire an employee, what their job responsibilities will be.
If you determine that hiring an employee is the best approach, knowing where you need assistance can help you to draft a more accurate job description and job responsibilities document. This can help you make better hiring decisions since you know what you need your worker to do – and how autonomously they’ll need to work.
By determining where they can make the most impact, you’re also better placed to decide whether the benefits outweigh the costs of hiring your first employee(s).
You’ll know, in advance, whether hiring new team members is likely to result in additional money flowing in. While this is ideal, it’s not always the case – as with some administrative hires.
Where the new worker won’t bring in additional cash flow, you’ll be able to determine whether their assistance will free you up to focus on more valuable tasks.
In either case, you want your early hires will make a positive difference to your life as a business owner.
When should your business hire additional employees?
We often hear business owners ask when they should hire more employees. Generally, you can apply the same strategy for your first hires to all your future hires.
The main difference will be that the job description tends to become more specialised as the number of team members increases.
Interested in developing a strategic plan for your business? Ask us how!