Hiring Your First Employee

As an entrepreneur, making your first hire is a huge step for your business. Before you post a Help Wanted ad online, you need to carefully evaluate what role the new employee will play in your small business and consider the financial impact on the company.

Before you start interviewing potential candidates, here are some tips on how to handle the process:

1. Consider Your Business Goals

One of the main reasons that entrepreneurs begin hiring others is because they’ve reached the point where they’ve become too busy to handle the business on their own and they want to continue to grow the business. But it’s important to think through which types of tasks you want the new employee to take on to meet those goals.

An important question to ask is whether you’re hiring an assistant or a partner. In the case of the former, you’re looking for someone who can handle administrative tasks such as scheduling or invoicing so that you can focus on operations and sales. If the latter, you may want someone with skills or experience that you lack who can help move the business forward.

Hiring an assistant will clearly be the more cost-effective route. Bringing on a partner, on the other hand, may even require offering some equity in the business but could be key to scaling the business more quickly.

2. Understand the Financial Impact of Hiring

Bringing another person into your company is exciting, but it can also be expensive. In addition to paying their salary, you’ll also need to cover your share of taxes, including Social Security and Medicare (15.3% of their salary) as well as purchase workers’ compensation and unemployment insurance.

While the ultimate goal of bringing on employees is to increase revenue over time, it is important to understand that hiring an employee is an investment that may not deliver immediate returns. There will likely be a learning curve while your new employee gets up to speed in the first few months, and you’ll need to spend time training them. You may be able to spend a bit less by bringing in recent graduates (whom you can train) and by considering fully remote employees who may take a lower salary in exchange for more flexibility.

3. Create a Job Description

Once you’ve decided that you’re ready to hire your first employee, spend some time writing up a job description that spells out the roles and responsibilities that person will take on. While it’s common for employees at a startup to wear many hats and take on many different roles, the more transparent you can be about your expectations, the more prepared they will be to understand the role into which they’re stepping.

The Society for Human Resource Management (SHRM) suggests performing a job analysis before writing a job description. That requires interviewing current employees about the required job tasks and collecting third-party data such as salary surveys on the position.

The job description should include not only the title for the position but also a description of the person’s proposed duties and the skills, experience, and qualifications. Make it clear that this person will report to you, the founder of the company.

4. Pre-Screen Candidates Carefully

Selecting your first employee is one of the most important decisions you’ll make as a business owner. After pre-screening promising candidates, you’ll want to interview several of the top candidates in person (one-on-one or with a panel) or virtually, recommends SHRM.

The interview process should reveal their skills and qualifications and give you a sense of their problem-solving abilities. You might consider looking for a candidate who has experience working with a startup or a very small business since the culture and work pace can be very different than those found at a larger corporation.

Keep in mind that you’re looking not only at the candidate’s current role but also at their potential since this is someone who will ideally be able to grow with your company. Ask candidates to share their references and make sure to follow up and check them.

5. Don’t Rush the Hiring Process

After evaluating the available candidates—and the cost of bringing them on board, you may decide that you’re not ready for a part- or full-time employee. In that case, you might consider starting off using contractors.

There are several benefits to working with a contractor to start, including lower overhead (you don’t have to pay taxes or insurance) and more flexibility to ramp work up or down as dictated by the flow of business. There are also some disadvantages, including the potential that your contractors will find full-time work elsewhere or prioritize other projects over your own.

There are many things to think about before hiring your first employee. By carefully determining the employee’s role and making sure they have the qualifications to fill the job, you will be setting your company—and your new staffer—up for success both now and in the future.