Deciding To Hire Your First Employee

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When your business is bursting at the seams and you meet yourself coming and going it may be time to hire someone to help. When I started to consider this post I intended to touch on all the issues an entrepreneur should evaluate before making the decision to become an employer. But as I went along, I realized I should break it up into several sections. Even the most astute business owners can be too close to their situations to act objectively at this watershed moment. It can seem so obvious that the only thing between your exhausted self and your disorganized business is that ideal right hand man (or woman.) That may be so, it often is. But not always. Think carefully before you take the leap.

That said, let’s look at the several elements of hiring your first employee.     Here are some questions that may help you answer this question for the business you’ve brought into the world.

  • Are you turning down work?
  • Are you getting more than usual negative customer feedback?
  • Does your existing business require more expertise than you have?
  • Do you see a prospective new income stream to add to the current offering of your business?
  • Is your time worth significantly more than the outlay an employee would incur including the payroll tax and insurance requirements you’ll be required to meet?
  • Is it possible to fill the need using a contractor rather than an employee? Might there be other more appropriate ways to deal with the labor requirements? As you explore these possibilities  take care to consider the legalities that may apply to your particular situation. We’ll get into that more later.
  • Will the work of handling payroll and other administrative tasks of being an employer be enough of a burden to offset the benefit?
  • Are you as certain as you can reasonably be that you will be able to meet your financial obligations regarding wages, withholding and other expenses associated with being an employer? This can’t be overstated. Prematurely obligating yourself to meeting the financial requirements of employing someone may be a deal breaker for the success of your business. On the other hand, the opposite can also be true. If you can’t handle your workload on your own the business will suffer.
  • Are you ready to allow another person into the business that has thus far been your personal domain? This is a big one as it can be very hard to let go of your responsibilities and allow someone else a degree of control.
  • Do you have systems in place to allow for someone else to be effective in their job? Adding a staff member can expose huge process issues in your organization and actually create more work for you until these issues are corrected.
  • Consider whether personal reasons create the need of at least one employee. Do you need more time to be able to enjoy the life your business is meant to provide? Do other obligations require more of your time?
  • Are you interested in growing the business for later sale?
  • And finally, are you hoping to provide a back up plan to keep the business running should you have to take time off or become ill?

All these are legitimate reasons and many tend to overlap one another. I’d ask you to ponder them and check the next post in which we’ll look at the first three points. This juncture is often a make or break moment in the life of a start-up and deserves a long and careful examination. As a business owner, you’ve put your blood, sweat and tears into your endeavor. If you’re seriously considering an employee, you must be doing most things right.  Be as diligent in making this call as you were taking the first steps in creating your enterprise.

Feel free to contact me or comment on my blog if you have any questions.

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