One of the biggest steps in a small business is the hiring of your first employee.
Like everything in life, the second, third, even fourth are all much easier: it’s the first that’s the hurdle! It requires the commitment to the growth of your business, and one employee can effectively double your salary costs and resources (if you are paying yourself).
As a small business owner staring out, you do everything! There’s no surprise there: you have to have a hand in every part of your business because no one else will.
So when should you hire your first employee?
Well the simple answer is: if your aim is to grow your business. it should be as soon as you can afford to. This means when the person will add value to your business, without strangling the finances.
Let’s break that down.
Add Value
In this context I am talking about both adding value to the business and your life. As a small business owner the two are deeply intertwined.
Adding your first employee will greatly reduce your stress and pressure (giving you back a bit of life and / or room to grow further).
This first person is therefore a large key to the next stage in your business – where the dependence on you decreases slightly and it starts to get a life of its own.
Be ready for the feeling that you are spending all your time showing the new hire how to do things and you would be better off just doing it for yourself! It will happen, but only by getting through this stage will you be able to create a business that is truly “a business” and not “you doing stuff”. (Yep, that is a can of worms I just opened, and I’ll expand on that in future guest posts)
Without strangling your finances
As I mentioned before, by bringing on your first employee you are effectively doubling your salary costs. Ouch! You need to be comfortable that you can afford to pay for your new employee for a period of time until you start to see the return from their assistance.
This includes factoring in things such as:
- all taxes,
- superannuation (currently 9% in Australia)
- leave loadings workers compensation
- any other related costs (dependant on the role)
When will you start to see the return?
The flow back in income will depend entirely on their role. For example, you would expect a higher (and quicker) turn around if you hire someone in a sales position (to actively generate new leads and sales for you!), but less so if you hire someone in an administration position (who provides you with extra time to focus on other areas of the business).
It may even be never! So you really need to be comfortable that their salary is available from the cash flow of the business without making other aspects fall over!
Questions to ask yourself
- Am I better off oursourcing your work to a virtual assistant, or similar?
- Would it be more worthwhile to have a casual or contract employee in my business part time?
- What role am I trying to fill?
- How will I manage this person?
- How will I fill this persons day, without feeling like I’m better off just doing it myself?
- What do I want to spend my time doing, and where do I add the most value to my business?
- What do I want to achieve in my business, and will this get me there the fastest way?
But don’t employ anyone just yet! In the coming weeks I will take you through:
- How to hire for what the business needs not what the business owner wants.
- How to identify the right role for your new employee
- Cashflow and affordability
- Induction, systems, and monitoring
Until then,
David Henderson.
David Henderson is one of a rare breed – a qualified and skilled financial services and business consulting professional who has also achieved success as a business owner and entrepreneur. David is a director on the board of a public company and CEO Asia Pacific of ROCG, an international professional services firm which specialises in family and privately owned businesses.
David is the creator of the exciting CashMAX™ suite of business accelerating tools specifically designed for privately owned businesses and based on years of work with thousands of SME companies. He has personally helped many of these owners generate their own business success.
For more information visit www.davidhendersononline.com
David Henderson is one of a rare breed – a qualified and skilled financial services and business consulting professional who has also achieved success as a business owner and entrepreneur. David is a director on the board of a public company and CEO Asia Pacific of ROCG, an international professional services firm which specialises in family and privately owned businesses.The post Guest Post: Hiring your first employee, part 1 appeared first on The Virtual Assistant - Your complete administration solution.