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How to Know When to Hire Your First Employee.

Updated on March 15, 2011

Getting Started

Owning your own small business can be a very rewarding and satisfying endeavor. You get to make all the decisions based on your wisdom and experience. The buck stops with you. Choose right, and you will see success and profit. Choose wrong and you will work your knuckles to the bone for what seems like nothing.

One of the most difficult choices you will need to make is, if and when to hire employees. For the purposes of this article, I am going to assume that you have already considered outsourcing services and have decided against it.

Once the decision has been made to begin hiring employees you will need to decide who to hire and what you want them to do.

The Money Funnel

Labor expenses can funnel profits down the drain.
Labor expenses can funnel profits down the drain.

Keep a close eye on your labor expenses.

This decision should not be entered into lightly. Your labor expenses can very quickly grow to be your largest line item in your budget if you fail to watch it carefully.

First things first - "Why are you hiring?"

First and foremost, decide why you are hiring this person. Do you want to be relieved of some of your personal responsibilities? Are you expanding and need skills you don’t have? Are you getting behind in some area of your business that is beginning to hamper production?

The next thing you need to determine is what you will want them to do. Depending on what type of business you are in there is a multitude of tasks you can assign as job responsibilities.

Essentially there are two types of people you can hire:

1.)    revenue generators – anyone whose primary activity is to help your business create more sales:

2.)    support staff – anyone whose primary activity is to work behind the scenes to keep your business operating smoothly.

If you are hoping to replace yourself and move on to other things to help your business grow, then the individual you hire will need to be a mirror image of you, or at least be teachable. If you only want them to relieve you of some clerical responsibilities or some other service segment, then hire accordingly. Whatever you decide, make sure you have enough work load to keep them busy.

Lighten your load.

It is possible you may want to hire an employee just so you don’t have to work as hard or as long as you have been. Sometimes with certain jobs I will bring in an employee just to help complete the job faster. There is no real financial gain from having a helper in this instance. It just means I get to go home earlier. The expense of paying someone is well worth the extra free time.

In other situations, it is essential that I have assistance or I would never be able to complete the job.  The skills and experience that an employee brings should be a compliment to the services your business offers.  Maybe you have a plumbing business and you frequently have a need for someone to frame in a bathtub.  So you hire a carpenter, or vice versa. 

Grow Your Business

If your decision to hire an employee / employees is based on your desire to grow your business, then you will want them to increase productivity and or add value to the services you offer. For productivity, the focus of your recruiting should be hiring employees that will help you to complete more work in less time. Please don’t over complicate this concept. Keep an open mind when reviewing what tasks can be delegated and what you personally need to accomplish. For example, hiring a person just to do clean up can streamline your operation significantly. In this example, a cleanup person would be considered a support person. Their goal is to give you more time to focus on sales, production, customer service, etc. or in other words, any activity that will increase revenue for your business.

I realize many small businesses will find it difficult to keep a cleanup person busy for a couple of hours let alone a whole day or even several days. That’s why it is important that you be creative in your job description during the hiring process. Set the expectations of your new employee at the interview by describing several activities that will be part of their job responsibilities even though it may not be in their title. An “administrative assistant” can vacuum and take out the trash at the end of the day as well as answer the phone and greet customers.

Add value to your business.

There are a multitude of things that can add value to your business product or service. You might consider adding an employee who is skilled at something you are not, or to reduce the customer wait time for the services you do offer. If you manufacture a product, consider adding an employee so you can further diversify your product line with different sizes, colors, or style. In the service segment, consider adding a customer service specialist; maybe someone who specifically spends their time following up with customers to evaluate their level of satisfaction.

Anytime you add value to your product or service it helps to differentiate you from your competition. In today’s business climate, even as a small business, you need to stand out from the crowd. If you direct your hiring towards adding value or productivity to your business, then it will be money well spent.

Increase profits!

Even hiring an employee just to give you more free time to spend with your family can be well worth the expense.  Whatever your reason, determine “why” you are hiring; decide “what” they will do; and then choose “who” will do it.  Finding the right person for the job will make your life easier and your business more profitable. 

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