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When is the right time to hire your first employee?

January 25, 2011 - Business Skills, Human Resource, Management, Managing People, Operations, Staffing, Valuable Skills
When is the right time to hire your first employee?

For many of us, we eased into the business – often through side work and freelancing. As we worked up we broke out on our own and then – WHAM. We hit the wall. Too much work, not enough time. Is it time to hire? The short answer is – it depends.

Here are four key questions to ask yourself when considering hiring your first employee. They aren’t the only four things to worry about, but they will get you 80% of the way there.

Are you ready to learn how to manage people?

There’s quite a bit of work in managing people. Not everyone is up to the task. Fortunately, managing people is a skill that can be acquired – but it is one that is WILDLY different than what you have been used to as a business owner.  If you are not ready to learn how to manage – then it is not the right time to hire.

Most people are not ready to learn. They think that their professional skills in their specialty magically transfer to people management skills. It is a bad assumption. This is how people get hurt, and businesses fail.

Are you hiring for tomorrow?

When is it the right time to hire your first employee?One of the biggest things you need to know when you hire is: are doing it for the long term? You may think you are hiring to help you solve the next big project, but if you are putting someone on the payroll, you must be prepared to make a long term investment in them. The reason for this is simple: Turnover.

Turnover costs money and creates drag. I can’t tell you how many owners I have met who refuse to consider hiring because they are so burnt out on the process that they simply can’t stomach the idea any more. These are folks who weren’t ready to learn how to manage, and didn’t consider employees as a long term investment.

Can you afford it?

The next consideration is salary. Here’s the thing. If you don’t have enough cash on hand to cover at least a years worth of salary – you aren’t ready for a full fledged employee. It’s unfair to you and to them to start a relationship where payment is going to be an issue. If you don’t have the cash to cover a years worth of paychecks – don’t do it.

Apart from salary, do you have the time to train them, manage them, and coach them? In the beginning, a manager should be spending at least 5-6 hours per week with an employee to make sure that the job is getting done well and error correct along the way.  Some jobs will require closer supervision – such as highly skilled jobs. Other jobs may require less.

Have you defined their job?

If you don’t tell them what to do, how to do it, and most importantly what a “good job” looks like – you will cause more harm than good. Many a hopeful owner has told an employee to do one thing and gotten results that were quite the opposite. Clarity of job, process, and performance expectations will save many headaches and heartaches in the long run.

Did you provide a handbook and a process manual to describe how things work in your company? Take the time to have one drafted, or buy a “canned” one and have it reviewed by an attorney. A smart owner plans for contingencies and protects themselves in the event of a bad hiring decision. (Don’t make bad hiring decisions.)

Keep these things in mind when considering if you should hire your first employee. There are other things to think about, like proper insurance coverages, and tax liabilities, but on the whole if you solve the first four considerations here, you should be well on your way to being a successful business owner – rather than a solo entrepreneur. You will be out of the way of your own growth – and well on your way to creating a company that can stand the test of time.

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