You may either be feeling overwhelmed as your business demands become more prominent, or you might looking to grow your business, well then you may be thinking about hiring your first employee in your startup. This is definitely a very important milestone in your business and I know it’s one that you’re not going to take lightly. This is a big decision.
You may be thinking about hiring right out of the gates once you’ve started your business or this can also occur months or even years later. Whatever the case, today’s show is going to highlight some areas to consider before hiring that first employee.
Now there of course are some pretty important “firsts” that should occur before hiring, and I won’t go into too much detail on these items that really should occur first, but let’s mention a few of the legal aspects of hiring an employee.
First, I recommend organizing your business entity as I mentioned in episode 3. You’re also going to need an Employer Identification Number (EIN), registering with your state’s labor department, there’s worker’s compensation coverage, setting up payroll, and all of the additional paperwork like having your employee fill out W-4’s, background check forms, creating employee HR files, and even developing an employee handbook. As a “pre-tip” we personally use apps like Freshbooks and Wave Apps for accounting and payroll.
Most of these items mentioned above are just necessary to have an actual employee in your business, and many of these items may have already been taken care of if you have already been paying yourself a salary in your business, which at this point I hope you have.
Tips to consider before your first hire:
- Don’t rush through the process.
If you’re business is just crushing it and you are having a difficult time keeping up with the pace, try to assess whether there is a way to pause for a moment so that you can reflect. Yes, you’re likely going to need to hire someone, but you want to make sure they’re going to be a good fit for your business. What’s your company culture like, your personality, what kind of skill set do you even need in your business?
- Can you afford an employee?
This is the area that I think worries entrepreneurs the most. Do you have enough money in reserves to afford an employee, have you projected how much additional funds will be coming in over the next few months or year, and do you have to take a pay cut to cover payroll? Pay cut!?
As the owner of your enterprise who has an equity stake in the company, you’ll likely be the first one taking a pay cut during those lean times when you still have to make payroll.
You also have to ask yourself that even if you don’t currently have enough business coming in, would hiring an employee help you scale up and have more opportunities to generate more revenue?
- Let’s make this clear.
Another tip I give when mentoring budding entrepreneurs is that your expectations for an employee need to be clear. And, this task is actually going to start with you. Now, you are the one running your business and most likely performing most if not all of the day-to-day tasks. So what does that actually look like?
Start writing these processes down during and in between tasks. This is where you’ll start developing your outline of expectations, and ultimately, your job descriptions along with the objectives to reach your business goals.
- Advertise for the position and connect with other entrepreneurs.
The job posting is where you’re going to take parts of step 3 and flesh these out into the expectations of the job. What position you’re hiring for, the ideal candidate including the skill sets needed, and outlined responsibilities.
I know Craigslist is free, but do keep in mind that investing a little bit of money and time in this process will most likely net you a pool of applicants that may be more aligned with what type of employee you’re looking for. If you need someone with a degree or specialized certification of license, then you’re going to need to branch out a bit. By using a tool like ZipRecruiter you can post jobs to several job boards all at once.
Have you connected with other entrepreneurs in your area? They may have just recently started going through the hiring phases or have ongoing job openings in their businesses. It’s quite possible they may know someone who could be a fit for the position(s) you seek.
Tips to consider during the interviewing and hiring process:
- Let’s go back to those expectations.
As you’re looking through resumes, LinkedIn profiles and such, evaluate whether the candidates appear to have the desired skills you’re looking for. Or, do they specify that these are areas they’re interested in learning more about?
Prior to and during the interview process, be very clear on the company’s mission and philosophy, and the expectations you have for the job. Now, if you’re still in startup mode then there’s likely going to be a few tasks that fall outside of the initial job description. If this is likely the case, then let them know this from the beginning.
Let’s not go as far as saying that if your kids are sick and you need a babysitter to stay home with them while you work that your new employee will fill that roll. If that happens they’re not likely to return to work. However, there may be tasks like running to the bank, going to the post office, personally delivering a client’s order, changing light bulbs, or troubleshooting a computer for example. There are many other tasks that can fall outside of the job description and be sure to let them know this.
Most startups have an “all hands on deck,” or “rolling up your sleeves” approach to do whatever it takes to get things done. Just be clear.
- Narrowing down the candidates.
So you’ve narrowed down a few of those candidates and you’re having a tough time deciding. Well, I mentioned this in an earlier episode that I’ll have the candidates perform a task that is typically expected within that position. How they handle this task can certainly give you a bit more insight on how they’re going to perform and get things done in your business.
Take the candidates out to lunch, separately of course. Do your personalities mesh? Is this someone you see as being a long term team member? Someone who’s also looking to grow your business? Those first employees are going to be vital to the future growth of your company. There who you would consider your founding team.
- It’s time to commit to that hire.
When offering the position to the candidate be sure to tell them why you’re choosing them. Discuss why they stood out to you. Then, when making the actual offer give them some time to consider the offer, but it is best to set an expectation of when you expect an answer. By setting a realistic expectation this will also give you time to go back to other potential candidates for reconsideration of the first candidate decides to not accept the offer.
- Check them out.
Some really important “Do’s” to consider are (but, not comprehensive):
- Do perform background checks
- Check those references
- Make sure you are in fact lined up with payroll
- Keep employee records
- Provide them with a thorough onboarding process
- Give them feedback and assist them with areas for growth
- Build your future together
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