When It’s Time to Make Your First, Second, and Third Hire

Date: August 08, 2018

It may not be obvious that it’s time to bring in some help. Follow these tips to help decide if your small business can handle a larger workforce.

Small business owners often dream of the day that their operation will be large enough to bring in some help. After working for months or years as a one-person operation, it can be hard to know when it’s time to hire your first employee, or even your second or third.

Many small business owners have had a recent “hiring epiphany” as small business job openings are at record high levels, according to NFIB’s May 2018 Small Business Jobs Report. To keep your business growing, follow these tips to figure out when to hire.

RELATED: How to Handle Contract-to-Hire Employees

Assess time management

As a small business owner, you’re always busy. That’s expected. But just because you’re busy doesn’t mean you need to bring on an employee.

You have to know when it’s more than just being busy—you’re also busy with work that could be accomplished by another person.

Online Optimism CEO Flynn Zaiger found the hiring process to be more of a gray area. His company has grown from just Zaiger to a 12-person company in the past five years.

“We grew gradually, so at a certain point, my 40-hour weeks became 50, then 60,” says Zaiger. “Around 65, you start to realize that you’re not being effective anymore—you’re simply staying in the office because you don’t know where else to go. At that point, I wasn’t sure what other options I had. It was time to hire.”

Write out a potential job description

If you can sit down and write an entire job description that includes enough tasks for a full-time position, then it’s time to bring someone onboard.

“Setting aside a day or two, or at least a few hours, to sit and think seriously about your culture and which values you should look for in an employee will help ensure you make the right hire,” Zaiger says.

Determine the cost of an employee

Figure out if an employee would be aiding the company or costing the company.

Zaiger did his own financial math at the time of his first hire. “I looked at the revenues coming in, made a rough estimate of expenses, and figured out if the additional cost of a hire would keep us in the black,” he says.

Zaiger also recommends financially planning for an employee to not be 100 percent effective until three to six months after their start date.

“If you’re going to be requiring a significant increase in work and revenues immediately, those are unrealistic expectations and you’re setting up both the employee and your company for failure,” he says. 

Evaluate opportunities

Is it costing you to keep running a one-person operation? If you’re turning down work or pushing off potential opportunities then it might be time to bring someone on the team.

“It’s often time to hire a new employee when you feel that your service may be slipping,” says Deborah Sweeney, CEO of MyCorporation based out of Calabasas, California. “It’s important to stay in tune with customer response time and engagement. When you are behind with your current customers, that means it is hard to focus on growth, so you should consider hiring.” Sweeney has grown her operation from 30 to 54 team members.

If you are hesitant to bring on another full-time employee, yet you want to continue growing, try testing out a contractor.

“Our in-house developer was initially hired as a contractor,” says James Green, founder and CEO of OfferToClose.com in Los Angeles, who has hired three employees. “He was a bit reticent to take a full-time job with a new startup, and for us it was a big expense, so him starting as a contractor gave us both the ability to test out the relationship without having to make a big commitment.”

RELATED: Should I Use a Freelancer or Hire an Employee?

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