You are growing! There are not enough hours in the day. The customer base has doubled. It’s time to hire…. Or is it? There are some important questions to ask before you begin your first hire:
- Can you actually afford someone?
Before you embark, ask yourself what is your current take-home pay? What will it be once you’re supporting a new employee’s salary? Will you be taking home enough to pay the bills and to avoid debt? Are you taking home more salary than you need?
If the answer is “Yes”, then your business may have the financial resources to support a new employee. Allowing sufficient time and cash flow for your new employee to generate the return is vital. View your employees as a valuable investment in your business, increasing business and revenue. Remuneration is important, but how you engage, praise, develop, and create a purpose for your staff is vital. Consider your incentives first. Renowned management author, Dan Pink explains human motivation at work is much more than money. The right investment in your staff will grow productivity, increase retention and create a great place to work. How will you invest the time and resources in your hire to give them the challenges, opportunities for mastery? How will you build the sense of purpose that will allow your staff and your business to thrive?
- Are you busy, or are you ready?
Is your business planned around processes that are repeatable, and that you are able to delegate? If your clients are highly varied, with specific projects and needs, can you realistically or efficiently delegate this work?
Again, if you can say “Yes”, then start by documenting your procedures around key tasks, building a manual for future staff. Start by documenting a range of “filler” tasks; expense reconciliation, database sanitation, and so on. These will ensure that you are not left hunting for business jobs to work on, but remember that the focus must be on value creation in your business. List their tasks, Repeatable, Ongoing and a Weekly To-Do. Tools like Trello are fantastic at managing workflow. Prepare for your new employee by filling Trello with the three kinds of tasks. When you have reached about 20 hours of repeatable tasks, you are ready for your placement.
- Is it work that could be outsourced or done by a freelancer?
Accounting, manufacturing, web-site design, marketing, and public relations — even administrative assistants can be hired on a virtual basis now online. Remote hires can reduce costs and increase flexibility, and responsiveness working across time zones can speed up delivery times. Starting with contractors to do business jobs provides you with the chance to practise your management skills and gain insights into the work needs in the business. Paying on the delivery of service reduces your risk and protect cash flow. If the work is best done internally, do you need someone full time? Mitigate your financial exposure with an initial three-day week that you can build up to full time.
- Have you managed to establish your place in the market?
Do you know who you are? What is your brand? What do you stand for? What is the culture you want to build? What separates your business from the rest? How do you want your business represented to clients and wider audiences? Before you begin your search, articulate your brand strategy and guidelines. A clear, fresh focus on the unique aspects of your business will help everyone on the front line for growth. It will help the first hire of the company to understand your mission, vision and strategy with more clarity thereby adding value to your business and future employees. These people who are hired right at the beginning of your business journey are the ones to create the backbone of your long lasting business. If you have not established your business before you begin to hire, it can lead to a number of failed fits for the jobs.
- How will your hire affect your business prospects?
David Knowles of Pitcher Partners notes that the quality of employees is vital when raising capital “If it’s the sort of business where you have to raise capital … then the quality of the people you surround yourself with is the most important thing,” Knowles says. Look for complementary, rather than a matched skill set to your own, to fill the gap. The Wall Street Journal recommends starting your search within your network “If an employee recommends someone, there’s a much higher likelihood that person will be successful in the job. Why? Candidates get a much more honest perspective of the company, and in most cases an employee is going to recommend only someone he or she thinks will be successful, to avoid tarnishing his or her own reputation”. Hiring someone from a small business background may provide a better fit than employees with expectations attached to corporate work environments.
Contemplating your first hires provides powerful opportunities to develop your business. A critical evaluation of who you are, what you need, what your plans are, your cash flow and your work style will offer valuable insights to start up and small businesses at every stage of growth. Finally, consider the most important employee in your business, you! Your employees are there to provide you with the freedom to develop new business opportunities in the business or to step away from your startup to grow other opportunities.
Do you need help working out the best strategic approach for your business? Contact us today or download our Finance Toolkit here.