Considerations When Hiring Your First Employee

by Thom Tracy

2 min read

Hiring the first employee for your startup or small business is probably the most important hiring decision you’ll ever make as a small business owner. The right person can lighten the workload you’ve been carrying solo and help to grow your business exponentially; if you pick the wrong person, you may set yourself and your business back financially. Consider these factors when you’re deciding to expand your business by adding an employee.

What Kind of Employee to Hire

Probably your first consideration should be what kind of employee will best benefit and help to grow your business. Since the cost of hiring will add to your business expenses, the most logical choice is an employee whom you expect to substantially boost your revenues. That might be a salesperson who can increase your customer list, or it might be a person with special skills who can expand the products or services that your company offers.

It’s unreasonable to expect any employee to generate sufficient revenue to cover their expenses from day one of their employment. No matter how badly you want to increase your workforce, check to make sure that you can afford to pay your staff.

The Interviewing and Selection Process

Precisely because this first employee for your business will be so important to the future of your company, it’s equally important that you exercise extra care in deciding who to hire. To increase your chances of picking the right candidate for the job, consider using traditional interview questions designed to reveal skills and knowledge as well as behavioural interview questions that to reveal how a candidate has actually dealt with critical situations in the past, which may give you a better idea about potential employees’ basic attitudes.

You may want to especially seek out candidates who have experience working in startups or small businesses. Typically, the few employees of a small business are used to doing a number of things to help out that aren’t strictly in their job description, but people who have only worked for large companies may lack that “pitch and do whatever needs to be done” attitude.

Conduct at least basic background checks. It’s worth the expense to protect your business.

Compensation

There are a number of issues to consider in regard to compensating your new employee, such as hiring them on an hourly, salary or commission basis. It’s great if you can find a person who understands the limited financial resources of a new business and is willing to accept some kind of salary-plus-performance-bonus arrangement that doesn’t require you to pay your employee a lot of money until it’s justified by what that employee actually adds to your company’s bottom line.

Adding an employee means dealing with payroll and other tax issues, as well as properly deducting the overhead expense of employee compensation. To keep everything straight, and with the least amount of trouble, use a solid small business accounting software program, such as QuickBooks.

References & Resources

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