CPA at Centaur Digital Corp, helping busy business owners decrease the amount of time and energy needed to manage their accounting system.
There are a lot of opinions about when a business owner should hire their first employee. Each situation is different, so you need to consider what stage your business is in, how much capital you have and what your growth trajectory is. This article is for small-business owners with a positive growth trajectory who have little capital—meaning hiring someone with a lot of experience isn’t feasible. For these owners, the first hire will be financially riskier and more of a learning process than instant success.
The goal of the first hire is usually to alleviate the business owner’s workload and allow for further business expansion. In the short term, however, it will actually increase the owner’s workload since they must now also teach the new employee. If you are a small-business owner who fits the description above, follow these tips to efficiently hire your first employee.
Tip 1: Focus On Teachable Tasks
It can be tempting to delegate tasks that you find hard. This would free up time, so it seems like a no-brainer, right? These tasks, however, also tend to be those that are hard to teach. For a first hire, focus on filling a position with tasks that take up time and are repetitive, but easy to teach. For example, teaching someone a sales role is hard, but teaching someone to send follow-up emails and set appointments is simpler.
Tip 2: Fill Support Roles First
Key positions for a small business are essential to its overall success. When you search for your first employee, it’s likely the turnover will be high, meaning you will likely fill the position again in the future. Don’t try to fill key positions with your first hire. It’s unlikely you can afford a high-quality person, and they are not likely to stick around for long. Focus on finding someone to fill a support role, which will allow you more time to focus on essential tasks.
Tip 3: Hire Your Weakness
Small-business owners should focus on hiring someone who can complement their strengths and compensate for their weaknesses. Depending on your budget and weaknesses, this may or may not be achievable. However, in order to grow the business, you have to compensate for your weaknesses by hiring the right people.
Tip 4: Consider Saving Six Months’ Worth Of Wages
Personally, the first hire has always given me anxiety because the salary usually accounts for a large portion of the business’s operating expenses. Furthermore, you don’t want to hire and train someone only to have to lay them off because the business slowed down. To combat financial risk, a business should have six months of wages set aside to cover payroll.
Tip 5: Document The Training Process
As you go through hiring your first employee, make sure you document everything that you teach them. Either through turnover or expansion, you will likely need to repeat this training. Save yourself time by documenting the entire process so you can streamline it.
Tip 6: Use Contractors When Possible
The process to hire another employee can be daunting when broken down into its component parts. An alternative is to hire contractors instead of employees. The internet has opened up the world of contracting and it can be easier to fill positions for specific tasks rather than trying to find an employee.
There are many paths that a business can take to grow and expand, and these will undoubtedly lead to hiring more people. The first hire can be daunting, but it can also be a great learning opportunity. Focus on delegating tasks that are easy to teach, hiring first for support roles, shoring up your weaknesses, having enough money for six months of payroll and documenting the whole process.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.