Launching and Growing a Startup: When Should I Hire My First Employee?

This article on how to hire your first employee is the third part of our series on launching a startup. For part one, click here. For part two, click here.

As an entrepreneur, your time is best spent bringing in customers and managing the company to create profit and growth. Ideally, all other tasks would be completed by others who are better at it and can also do it at a lower cost. Many business owners wait to hire help until they feel they can afford to do so. This is often far too long. If you hire your first employee and find the right fit, they will more than pay for themselves in a very short period. The investment allows you to focus on what brings in more money for the business.

Assign tasks thoughtfully

When a business isn’t running efficiently and effectively on its own, it’s often because of a job mismatch. Having the right staff for the right tasks is important not only for the success of the business but also to retain employees in the long-term.

In my last article, I talked about how having the right people doing the right job starts with you. You should ask yourself these three questions.

1. Where do I excel and what tasks fill me with energy, even after working on them all day?
2. What are the tasks that I can manage well, but if I had to do them all the time, I would leave feeling drained and exhausted?
3. What are the tasks that I’m not good at but take on anyway, even though someone else would be a better fit?

Knowing your answers to these questions will help you to hire the right people for each position. Your goal is to hire the people that can handle the things you struggle with or shouldn’t be doing.

Organize a list

Start by making a list of the tasks the new hire will be responsible for and the type of personality you need for that position. For example, will they be behind the scenes doing bookkeeping? Or will they be out front meeting, greeting and talking to clients and customers? Will they be working alone or interacting with others? Knowing how you need them to interact in your business can guide your search. Pay attention to see if the person you are interviewing has a personality that fits the position.

Hire for personality and train for skill

It may sound crazy, but I often prefer to hire someone that has little to no experience in the tasks I am hiring them to do. When they have been doing the tasks for a long time, I often had to untrain them from doing things the way they were used to and re-train them to do it the way I need it done. This can take a lot of time.

Also, for many positions, it’s less about their experience and more about their personality. You cannot change who a person is. But if they have the right attitude, are reliable, ethical and hard-working, you can most likely provide training to fill in the gaps.

Often when we are hiring our first employees, we tend to talk too much. During the interview, they’re trying to sell you on why they are the right person for the job.

Here are a few questions to ask when interviewing candidates.

1. What prompted you to apply for employment here?
2. Why are you looking to leave your current employment?
3. Tell me your understanding of what this position entails.
4. Looking back at your past positions, what did you like the most?
5. Looking back at your past positions, what did you like the least?
6. Tell me about a time when you had a very challenging client/customer and how you handled it.
7. How do you prefer to learn? (One-on-one with someone teaching you, looking things up on your own?)
8. What would you say has been your greatest success so far in your life?
9. What would you say has been your greatest failure so far in your life?
10. Describe what your ideal job would “look like”.

Can your business run successfully without you?

When you prepare to hire your first employee, you need to ask yourself if your business can run successfully without you (at least for a while). If you were out sick for a length of time, needed a vacation or had to take care of your family, would your business still be able to function?

I have always felt that my job as a parent is to teach my children how to be independent, self-supporting, happy and good citizens who can manage on their own. After all, someday I won’t be here, and I want them to be prepared. I feel the same way about running a business. You may need occasional time off and someday you may want to retire or sell the business. For that to happen successfully, the business must be set up to run without you. This is why thoughtful hiring is crucial.

Cross-train employees

If you have more than one employee, it’s important to cross-train them. Begin with assigning the primary tasks each person will be responsible for. Then train at least one or two other people on those same tasks.

5 reasons to cross-train employees

1. In the event that an employee is out sick or on vacation, someone else will be able to keep things running smoothly and manage that employee’s work.
2. If an employee were to leave unexpectedly and permanently, it could be extremely difficult to get the work done while also taking time to hire and train someone new.
3. Often our workflow is uneven. When employees are cross-trained, they can help each other to stay on schedule.
4. Two people can have different thought processes and ways of completing a task. The old saying “two heads are better than one” can apply here.
5. Having employees cross-trained can make work more enjoyable. It can provide more flexibility in their day and reduce the chance of being bored from doing the same task all the time. When work is enjoyable, employees tend to stay with you longer.

If employees have not needed to do the other person’s tasks for a few weeks, it’s important to periodically swap the work so everyone remains sharp on how to do each task.

You get what you pay for

“You get what you pay for” can be very true when hiring staff. The key is to hire the right person at the right pay. Hiring low-cost staff can be a mistake. Research what other companies pay for similar work. Take the time to hire the right person and pay them appropriately.

Assistance in hiring

One option to help you hire is to use an employment agency. There are several advantages to using a good employment agency.

1. The agency will know the appropriate pay range for the work you need
2. They pay any expense to advertise the position
3. They review all resumes and only show you ones that apply to what you are looking for
4. Once you decide who to hire, they will typically be the agency’s employee for at least three months. That means:
   • Any time you are not happy with the employee, just tell the agency to find you someone else. You do not need to fire anyone.
   • The agency will typically charge you a fee that includes the employee’s pay, any benefits, social security tax, Medicare tax, their fee and any other required employee expense. They also handle all of the required filings.
5. Many agencies will allow you to transfer the new hire to be your employee after 90 days. By then you should know if they are a good fit for your business. Once they become your employee, you no longer pay the agency.

Before you work with an employment agency, make sure you have all the terms and costs in writing. Some agencies have higher fees than others and some charge an additional fee for the employee to transfer to you. Doing your research in advance and getting everything in writing will eliminate any unexpected expenses later.

Have a hiring plan

Whether you decide to use an agency or hire the right person on your own, go in with a plan. Take the time to determine the job tasks, the personality you need, the number of hours they will be working and an appropriate pay range for that position. With this, you will be ready to find a great employee that can help you grow your business and give you space for time off when you need it.

About the author

Nancy D. Butler built her business as a single parent with no other income and $2,000 to her name to $200 million in assets under management, before selling it. For the last 14 years, she is an international speaker, award-winning author and for 2018, 2019 and 2020 a delegate to The United Nations for The Commission on the Status of Women. She has coached businesses to provide better service to their clients while increasing their bottom line by an average of 300 percent. Butler has over 35 years of business experience.