The Five

Learning Series

August 16 2016 // 5:00 AM

Five Things to Do Before Hiring Your First Employee: Part 1

Written by Dave Huffman |

Five Things to Do Before Hiring Your First Employee: Part 1

Having owned a small consulting firm, I learned first-hand of the many opportunities and challenges surrounding hiring new employees.  These five things will help you if you are looking to grow your small business or if you are just starting your own firm.  

1.    Do you WANT to hire someone?

If you’ve been working on your own for a while, you may not want to complicate things.  You need to ask yourself if you will be able to share your space.   Also, consider if you are ready to delegate some of your work to someone you may not know well and may not be 100% certain of their abilities.   If you aren’t ready to share your space, or move to a larger office, consider whether you truly WANT to hire someone or not.  If you aren’t 100% committed, perhaps it‘s too early to start expanding your firm.  If you are positive you WANT to hire someone, be prepared to change your mindset and how you run your business in order to accommodate more employees.

2.    Do you NEED to hire help?

Is your business plan set up for growth?  At what point in your plan did you expect to be hiring additional employees?  Perhaps the biggest consideration in determining your need is your quantity of backlog.  Do you have enough work scheduled to keep an additional employee busy full time or part time?   All these questions need to be answered before proceeding with hiring your first employee.  If you can’t answer any of these questions, you may want to consider not hiring anyone at this point.  Another option would be to hire a temporary employee, especially if you are not sure what your backlog will be.  

3.    Get the company PAPERWORK in order.

Assuming you have determined that you’re ready and need to hire your first employee, you should prepare and file all of the paperwork required for the company to be able to hire employees.  This includes acquiring an Employer Identification Number (EIN), setting up records for Federal, State, and Local withholding taxes, and a half dozen more regulations and paperwork.  Getting this out of the way early will benefit you down the road.  Visit the Small Business Administration website to see the governmental requirements.

4.    Determine the ROLE new employee will fulfill.

Do you need a professional or an entry level person?  You will need to determine whether they will be experienced enough to run their own projects or if they will be able to provide the required design for the client.  Or perhaps you are only looking for a draftsman.  Before you can hire your first employee, you first need to define the role and responsibilities they will be fulfilling.

5.    Time to PAY the piper.

Now is the time to determine the compensation package you are willing to offer.  This should be determined before you have your first interview.  You should have a range for the compensation package depending on what you can afford and the candidate’s abilities.  Consider the following: salary, healthcare, dental, and vision insurance, sick leave, holidays, vacation, personal days, or a lump sum of paid time off (PTO), work space and equipment, and company equity in lieu of salary.  All of this should be determined before you begin interviewing potential candidates.

These are just five of the things you should take into account before you hire your first employee.  Next time, we will look at five more things to consider as your firm grows.

Until next time, I’m Dave Huffman.  Thank you for reading.

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