When Should You Hire Your First Employee?

There are as many routes into running your own business as there are individuals doing it.  For some it was that redundancy notice that provided the necessary push, while for others it’s a slower, progressive move from a hobby on the side to a part-time arrangement to a final fulltime going it alone.  However you got there, there often comes a time when the realisation that the books are rather too full and that all that freedom you heard about as a self-employee is no more than a pipe dream.  Time?  Free?  There’s barely enough time to eat.  Could this be a sign that business is booming and it’s actually time to get some help in?  Could be, indeed.  So should you take the plunge and what do you need to do to prepare?

Assessing Your Own Abilities
Your business might be ready to take on some staff, but are you?  This is actually a crucial question.  What experience do you have of managing people?  This is more about the people skills side of the equation than the necessary legal knowledge of how to manage staff (though the latter should be in there too).  If you were a manager in a previous life, then the chances are that you should be able to brush up on those old skills; if you weren’t then beat the fear and take a course!  That’s the good thing about management skills, they can be learned.  If you are just about to double your workforce – and capacity – it’s worth the time and investment to ensure that you can manage that workforce effectively.

Supplying Short Term Demand
The next significant consideration to take into account is the sort of staff you need; fulltime, part time, temporary or permanent?  It’s really important to consider the implications for your business and to examine just how that workload got so big.  This excess in the order department is great, but is it a long term thing?  Financially committing to a permanent member of staff can be very expensive if the orders stop rolling in.  If it’s only a seasonal peak, then temporary agency staff may be the answer, or could a freelancer fill a short term skill gap?

Can you Afford the Best?
Cost and infrastructure considerations are crucial.  You’ll need to be able to afford a salary for your new employee, but that’s not everything.  In terms of salary, if you can’t afford a market salary for the job then don’t bother at all.  There’s an old saying about paying below the market odds and it may be a cliché, but like all good clichés it’s basically true.  You can get a cut-price office cleaner, but they’ll probably not have a right of residency and could land you in a lot more than hot soapy water.  A low cost website design will almost certainly be costly in the long run and not in a good way.  Yes, these are trying times economically, but they’ll get a lot more trying if you can’t afford to pay for the best in any field.

Additional Costs
The infrastructure costs here are endless, or at least the list can be.  Additional office furniture and equipment may be required and an old dining chair from downstairs won’t do – it’ll probably not conform to DSE requirements leaving you potentially costly legal problems.  Safety equipment for more risky professions will be required and, whatever industry you work in, payroll software will be a must.

Who’s the Boss?
The right time to take on staff is not when you have a workload that you simply can’t manage, but is when you’ve considered all of the issues above and addressed them sensibly.  In many industries you’ll have a reasonable amount of time to spot a growing workload and start your preparation time well in advance.  Ensuring that you have the skills to manage people, have considered all the relevant costs and regulations, and have systems in place to manage payroll, will all help to make the transition from self-employment to employer far smoother.

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