Hiring your first employee is a big step, especially if you’re used to working alone. But if they can help you make (or save!) money, it’s a viable one to consider.
In this article, we analyse which indicators suggest it’s time to hire, how your first employee affects business growth and what skill sets a micro-business owner should look for.
How to know when to hire your first employee
Besides obvious signs – like having enough cash flow and work to justify recruiting – there are specific business indicators it may be time to hire.
- You have to turn work down
It’s normal to always be busy. But if you’re starting to turn down work due to lack of time, you’re reaching a turning point.
At this point, it’s time to decide where you see the business going in the future. If you want to keep growing, consider adding a new team member.
- You need specialised skills
You can’t be a jack of all trades, regardless of how hard you work. Sure, you can try your hand at most tasks, but whether you’ll be good at them is another question.
If you require specific skills, it’s more efficient to hire someone that’s good at what you need. They’ll be able to perform the tasks quicker while freeing up your time to focus on other important tasks.
- You’re missing deadlines
There’s nothing worse than putting client relationships on the line when you realise you can’t stick to deadlines anymore. If your customer service is suffering, it’s high time to draft that job description.
Why your first employee is so important
Every new employee is important, but your very first hire has a particular impact on business growth.
According to the Journal of Small Business & Entrepreneurship, your first employee increases the likelihood of long-term business survival by allowing you to focus on the area’s of the business you’re passionate about.
As we’ve pointed out in a previous article, capitalising on each person’s unique skills saves valuable time and money. It also makes people more productive and allows the business to become more intelligent and flexible to grow in the long-term.
And by redistributing relevant, skill-based tasks to your new hire, you get a chance to focus on firm strategies that lead to greater performance down the line.
It’s also not just whether you hire – but how you hire – that’s important: there’s an established link between early-stage HR strategies and long-term firm performance.
Studies show that each year, the average company loses between 20% and 50% of its employees. The main reasons are low staff morale, motivation and engagement.
And the cost of losing an employee in the first year is particularly painful: at least three times their salary in lost training and finding a replacement.
But studies have also found that new employees are 58% more likely to stay for at least three years if they had an effective onboarding experience.
And while an onboarding experience may be more common at larger companies, it certainly shouldn’t be ignored by micro-businesses.
You see, companies that incorporate an onboarding process are more likely to achieve optimal ROI from their employees.
And an onboarding process isn’t complicated. It involves ensuring all admin bits (such as required forms) are complete, helping with initial task management and incorporating them into the company culture.
It’s worth it too: a study by London Business School and Cornell University found that improving just one part of the HR process can change your firm’s market value by up to 20%.
So long story short, the way you go about hiring and onboarding your first employee will increase the likelihood of them making a long term commitment and, ultimately, improve business performance.
new employees are 58% more likely to stay for at least three years if they had an effective onboarding experience.”
Ready to hire?
If you’re ready to hire your first full-time employee, congratulations. You’ve overcome your first (decision) hurdle and have now arrived at the next one: the hiring process.
According to a 2020 UK government survey, 36% of small and micro-businesses said staff recruitment was a major obstacle because they struggle to attract and hire the right talent for their business.
We’ve looked into what other small business owners found worked well for them to help inform your recruitment strategy.
Here are some of the main skills sets they advise looking for in your first-ever employee.
Being flexible is the holy grail of working at a micro-business. There’s always one problem or last-minute task making you have to reshuffle your to-do list. And even though your first employee will have set tasks, they’ll still be required to wear multiple hats.
When interviewing, look for a flexible attitude to work. Explain early on that they’ll be required to help with other tasks and look for indicators of similar past experiences.
For your first employee, it’s best to hire someone that’s worked at similarly sized businesses before. A candidate with a purely corporate background may be overwhelmed by the number of tasks as it’s not what they’re used to.
While fairly self-explanatory, it’s important to hire someone that’s competent at the skills you require. They’ll also need to be able to carry these out independently – you won’t have time to constantly look over their shoulder.
When in doubt, give them a short task to complete as part of the interview process. That way you’ll find out fairly quickly whether the candidate has the required skill levels.
While more of a character trait, honesty was mentioned as a key requirement. As a small team, you’ll be required to depend on each other, and trust plays a big role in that.
No one is perfect, and everyone makes mistakes. But there is a big difference between an employee that tries to cover up their mistakes and one that owns up to them while thinking of viable solutions.
While difficult to measure at the start, you can ask them how they’ve handled making a mistake in the past. Or, ask their previous managers about it when calling for references.
Finally, it’s important to hire someone with a good personality fit. You’ll likely be spending a lot of time with this person, so making sure you get along is crucial.
Personable people are also a plus if you need someone to work in a customer-facing role. Look for candidates with good social skills that your clients would value. Being smiley, chatty, confident and outgoing during the interview are good indicators.
A sense of belonging and connectedness
A study that looked into why some hirings fail found the majority are due to the employee not developing a sense of belonging.
New employees decide whether they feel at home or not within the first three weeks, and 4% leave a job after just one day.
Fostering a sense of belonging and connectedness to make them feel welcome will go a long way.
As an employer, try to find ways to connect with them through interests, hobbies or sports.
New hires want to feel they’re part of a team. And even if it’s just the two of you for now, it’s still important to make them feel accepted as a person.
This is what’s known as psychological safety: when you foster a trustworthy environment so an employee feels comfortable enough to voice their opinion without being shot down.
And according to Google, this will also help make new employees more productive. They found that teams with an open-minded culture that met the factors of psychological safety were more likely to achieve success in a project.
Three hiring tips for micro-business owners
- Utilise social media. Promote your job description on LinkedIn because, with over 500 million users, it’s an often-used platform to find new opportunities. And employees hired through LinkedIn are 40% less likely to leave within the first 6 months. Here’s how to use LinkedIn for your first hire.
- Hire skill sets you don’t have. Business owners tend to hire people just like them. But you don’t need another person with the same skills. Have a listen to our interview with Dara Huang of Design Haus Liberty to find out what type of people you should hire when starting out.
- Trust your gut instinct. When in doubt, don’t hire for the sake of hiring. If you hire the wrong person, it can cost up to £30,000 to find a replacement.
Make the first move
Your first employee plays an important role in business growth: they take work off your shoulders and help the business perform better.
As an owner, how you hire will determine if it’ll be successful. By optimising the process and making them feel welcome, you’ll maximise your chances of long-term retention.
For more small business advice, have a look at our recruitment section on the blog and sign-up to our newsletter below.