Right, so a question I get asked A LOT is around hiring your first employee.  When to do it, how to afford it, which role to recruit for first?  So if these are some of the questions which have been keeping you awake at night, then this article is for you.

We will start at the beginning today, we’re going to look at what needs to be in place before you start hiring, creating your organisation cart which will tell us what employees you need in the business.  Then we’ll look at how to choose which one to recruit for first and because this goes hand in hand with when to do it we’ll take a look at that to.  Lastly we’ll look at ways to afford it.

Lets start at first base, what do you need to do or have in place in order to recruit your first employee.

So an entrepreneur’s business journey is really split into 3 key stages and where you are on this journey will drive what you have in place behind the scenes.  So the 3 stages are:  having a profitable job, have a profitable business and having a profitable investment.  Making your first hire fits into that period where you are transitioning from having a profitable job to having a profitable business. Because the idea is they take some work off your plate so you can focus on what needs to be done to bring in more sales.

Now it can be scary making your first hire, it can be an HR minefield, you have to have contracts in place, you need to know what awards (if any) apply, you need to make sure they are the right fit…the list goes on.  What you really want to make sure, is that you hire the right personality for your business. Don’t be caught up too much in their CV, you can always train them to get them working the way you want, you can’t train personality into them.

As a side note here, I have made this rather catastrophic mistake myself so I really do come at this from a personal perspective.  I hired a PA based on her CV.  She had years of ATO experience so she knew their systems and process inside and backwards, she was a bit older so she came with both life and work experience and she presented well.  But it was her CV that really caught my eye.  To begin with she was fine, but then it transpired she wasn’t particularly IT literate.  No biggy, we trained her.  But then the mood swings started, she refused to do any binding because she felt she was above doing something so basic, she started to refuse to do the mail, do any scanning or filing, I started having clients complain about their treatment from her as she’d been rude or snappy.  The final straw came over something really small:  the dishes.  I went into the office over the weekend to find her dirty dishes all over the place.  I had a client meeting offsite first thing on the Monday so I left a note in a neutral spot to all staff just asking them to make sure dishes were done last thing on a Friday so they didn’t attract bugs etc over the weekend. I had a text message from her saying how she felt I was being unfair about doing the dishes, that as an egalitarian office which by the way, was not something I had outlined in our culture, she felt we should be doing our own dishes.  Well given the dishes were hers anyway I felt this was a bit rich.  But anyway, before I had a chance to respond, I had another text message saying that if I was going to insist on the dishes being done, she would resign.  So I accepted her resignation.  Lesson 1:  never let an employee blackmail you.  Now, I made her work our her notice period because we actually needed somebody doing her role while we recruited for her replacement.  During that time she abused me personally, abused other staff and generally speaking was an utter nightmare to be around.  Finally she left, and the following day the atmosphere in the office was like a different planet.  Everyone was actually happy and laughing.

So what did I learn from this?  1.  I extended our probationary period out to 6 months because she really dropped off at the 4 month mark when she clearly relaxed knowing she had successfully completed her probation.  2.  I now hire almost exclusively on personality.  Now, for technical staff, I expect there to be a certain level of technical knowledge based on their experience, it’s a given so whilst I look at it, I don’t spend too much time on it.  I really focus on their personality.  We are a small team and the wrong personality can have a really big impact really quickly.    3. They need to be working “above the line” that is, they need to take ownership for tasks, be accountable for their work and take responsibility for their actions.

This is nearly all driven by a strong focus on our vision, mission and culture.  So the vision is where you want to see the business in the next 3 – 5 years, the mission is how you’re going to get there and the values and culture are the everyday behaviours you and your team demonstrate both to each other and in delivering your product to your clients.  These are things which you need to be clear about and have documented before you make your first hire because you will be using them as a yard-stick to manage their performance.

The other things you really need to have in place before you start hiring are your systems and processes.  As a solopreneur working in a profitable business you will have certain systems and processes in place to make sure that at the very least, repetitive tasks are able to be completed quickly.  The trouble is, a lot of the time they are in our heads and not actually written down or in a video which can be used by a new hire to teach them the same process.  This means they either won’t perform to the same standard as you or they’ll set up a new process which doesn’t fit with how you want things run.  Before I move on, I word to the wise here, as a good manager, you will need to learn to accept feedback, good and bad.  You may find a fresh pair of eyes looking at your process will see it could be done a better way.  There’s a difference between having someone use your process and being closed off to improvements.  You need to balance the two.

Now, the next step is knowing who to employ and to do this, you really need to have done your organisational chart.  So an organisational chart shows each of the different functions your business has and who is in charge of the various aspects of making sure that function is completed and runs smoothly.  There are generally speaking 7-8 core functions of every business, no matter what it’s size is with a couple of optional functions depending on what your business is actually doing.  I’ll run through the functions quickly as today we aren’t really in the market to be talking about what each of them does:

  1. Finance
  2. Sales and marketing (could be separate depending on the size and strategy of your business)
  3. Customer service
  4. Operations
  5. Admin and business planning
  6. IT
  7. Legal

The optional functions you might need are:

  • Research and development
  • Production
  • Distribution
  • Purchasing.

Now at the moment, you are probably wearing most if not all of these different hats, and that is perfectly normal in a business which is poised to grow.  But it won’t grow if you continue to hold onto all of these hats. Let’s just run some numbers on these hats.  If each hat is one job role, then one person would be giving 100% to that job role.  If you are doing all hats that means you are trying to squeeze 700% – 800% out of yourself which just isn’t possible or if you are doing it, it’s not sustainable and you will burn out.

It can be pretty daunting handing over to someone new try to think of it as more of a delegation process which should help to get your mind around no longer doing some of this stuff.  So, how do you choose which one to delegate to first?  Personally I would pick on an area which you either hate doing, don’t know how to do or spend too much of your valuable time doing when you should be focusing on growing the business.  Usually it comes down to either the finance function or the admin function. 

I should make clear here that we aren’t necessarily talking about going from zero employees to full time employees.  You can outsource, use contractors, casuals, whatever it takes to help take some of the work off your plate and free up your time. And crucially, make it affordable. Which really becomes the crunch point here, when should you be recruiting for this illusive first employee.  Well, there’s no hard and fast rule because it really depends on your unique business and your strategy for the business however, I will say, much earlier than you think you should be.  I have made this mistake and trust me, all it does is hinder growth and stress yourself out (which just further hinders growth).  Basically as soon as you have the cashflow or the promise of the cashflow, hire the employee so you can make that cashflow a reality. Rinse and repeat.

Ok, but how do you afford to do it because at the end of the day, you have to pay them.  Well a strategy with use frequently for our clients is the use of bank accounts as buckets.  And by this I mean we use different bank accounts to manage different aspects of the business.  So in this instance we would set-up another bank account bucket as soon as we became aware that an employee was needed – this may be 6 months ahead of actually hiring them.  We then have our clients pay into this bucket straight away, in other words, we start saving for the new employee’s salary.  With every new employee there is a bit of downtime when they first start and you are onboarding them.  During this period you aren’t doing as much work as normal as you are spending your time with them training.  This money will help to pay their salary during this period without putting an extra constraint on the business during the onboarding process.

This strategy works especially well when fulltime employees are being brought in, if you are using contractors or casual employees there is nothing to stop you from doing the same thing so you can keep a track of your spend.

Right, so there we have it, what you need to do behind the scenes to be employee-ready, how to go about choosing which employee to bring in first, when to bring on your first employee and how to afford it.  Now that you are armed and ready to go, you have no excuses to going out and hiring your first employee! 

I hope you’ve found this useful, and I will catch you in the next one!

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