Ready for Your First Employee? Take These 7 Steps before Saying "You're Hired!"

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Up until now, you’ve run your small business on your own. As time has gone on and you’ve seen your success—and workload—increase, you’ve reached a tipping point and realize it no longer makes sense to do everything yourself. Congratulations on reaching this milestone! That, in itself, is a big deal. But before you take the leap and bring someone on board to be employee #1, you need to prepare. There is a lot to think about when adding an employee to your business model.
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Take these 7 steps before you hire your first employee.

1. Decide what you need help with
Identify exactly where you need help and what you’ll trust someone else to take on. Hiring someone just because you are busy and overwhelmed won’t solve your problem. Chances are, you’ll still end up doing most of the work, and you’ll have a hard time delegating because you don’t know exactly where you are willing to let go.

When deciding what to hire for, think about:

• Tasks you can’t keep up with. Tasks that occur with a high degree of frequency will only continue to pile up as you grow. And if you’re spending all your time on these tasks, you are neglecting other parts of your business, or you are running yourself into the ground. Either way, it’s not a good situation. An employee who can focus on these high-frequency tasks can be just what you need to keep customers happy and operations running smoothly.
• Tasks you don’t naturally prefer. There is no shame in handing off the tasks you don’t like to do! Everyone has different preferences, so you might find an employee who thrives on the very tasks you despise.
• Tasks you are not very good at or don’t know how to do. Instead of trudging through creating a social media campaign, designing packaging for a new product launch, making cold calls, or whatever it is you need to do but don’t know how to do very well, consider hiring an expert. You’ll be better served spending your time on tasks that you alone can do to drive your business forward.
• High-impact tasks. Are there tasks that you know will have a big impact on your business but you just don’t have time to get to them? The right employee can help take your business to the next level.

 
2. Document, document, document
It’s likely that a lot of the “how to” about your business is hiding in your head. The time to put it down on paper is before you hire your first employee. You can’t expect employees to read your mind about business priorities and best practices. Write it down! Create templates, document common procedures, map out routines and workflows.

As you document, question everything. Take the opportunity to scrutinize how you run your business, asking: What can be improved? What can be eliminated? Where do you want your business to go next? Don’t just hand tasks off to an employee because they’re on a to-do list somewhere. Make sure the tasks make sense for your business.

This is a great time to put together an employee handbook that outlines important policies and processes.

Warning: If you don’t have time to document, you don’t have time for an employee.
 
3. Create the job parameters
Make sure you can identify the right person for the job. Think about the jobs you need done—and the kind of person you imagine doing them. Do you need someone who is very detail-oriented and will follow your procedures exactly? A self-starter who will bring you ideas for innovations and ways to improve efficiency? A friendly customer-service person or a marketing and networking expert? Turn your answers, as well as a list of role-related responsibilities, into a job description.

Also consider:

• Work hours: Are there fixed work hours each week? A variety of shifts that need to be covered?
• Location: Does the job need to happen at your place of business, or will hybrid or remote work be the norm?
• Experience: Can you train an employee to do the job, or do you need someone who already knows the ropes and can bring their expertise to the role?

The parameters you set for the job will drive the types of candidates you attract. In order to know a good fit when you see one, you need to know what you’re looking for.
 
4. Plan for orientation and training
Being employee #1 is a big deal. It can be scary for the employee to tie their income to a company that’s just beginning to grow. A rushed or haphazard transition into your business could signal to the employee that they are making a mistake.

Setting aside time to properly orient them to your business and teach them the ropes can make all the difference. Something as simple as setting up a company coffee station and providing a list of nearby lunch spots tells an employee you care about them as more than just a button-pusher.

Don’t expect an employee to come in and know exactly what to do. It’s up to you to set them up for success. If they can’t do the job, that’s on you. You either didn’t hire right, or you didn’t train them right. Either way, just like everything else in your business, the buck stops with you.

It can be tempting keep a tight grip and continue to do tasks yourself that your employee was hired to do. “It’s faster to do it myself” is a common misconception of micromanagers. And while it’s true that—for a short time—you’ll need to slow down, and it will take more time to train an employee than to perform a task yourself, being able to hand over a task to a well-trained, competent employee will be a huge time-saver in the long-run.
 
5. Understand the legal requirements
As a one-person business, you avoid many of the legalities that apply once you hire an employee. Consult with an accountant and perhaps a business law expert to find out what you are required to do and what’s just good practice.

• Do you need full-time or part-time help?
• Should you pay an hourly wage or an annual salary?
• What are your requirements for minimum wages and overtime pay? What about holidays?
• Are you hiring an employee or a contractor? Make sure you know the difference, because the IRS sure does!
• Is there any required training, such as cybersecurity or safety?
• How do you handle unemployment tax and workers’ compensation?
• What documents are required to verify identification and employment eligibility?
• Are there any industry regulations you need to follow?
• What taxes will you need to withhold?

Never make assumptions when it comes to the law or the IRS.
 
6. Prepare a workspace
You’ve carved out your own space at your business—whether it’s behind a computer screen or behind a counter—and now you need to make room for someone else.

Think about everything the employee will need to do their job. Do they need a desk? A computer? An email address? Phone number? Keys to the building? Access to software tools?

Don’t wait until after they arrive to figure this out. There is nothing worse than showing up on your first day and standing around awkwardly while your new employer pushes aside a few piles of paperwork to make room for you. As if starting a new job isn’t nerve-wracking enough, being the first employee can feel like you are intruding on someone’s personal space. Make sure the employee has everything they need to feel comfortable, right down to pens, paperclips, and sticky notes.
 
7. Determine your budget for salary and benefits
It’s tempting to put together a bare-bones employment package. After all, you are running a tight ship, and there is not a lot of room for waste. And while you absolutely want to be smart about your employment costs, be careful of the old adage, you get what you pay for. If you hire the wrong person for the job simply because they are the least expensive, it can come back to bite you in a big way.
Sloppy work, poor judgment, or little loyalty to your company will end up costing you more in the long-run—and not just financially! As a small business, your reputation is on the line with every employee you hire. If the quality of your company’s work suffers, customers will be quick to look elsewhere for their needs.
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Research comparable jobs and make sure you understand the market. You’ll want to pay a competitive wage and put together an attractive benefits package, but make sure you can afford it. You may be able to offer some creative, low-cost benefits that will make up for the more comprehensive packages larger companies can put together. For example, maybe you can offer more flexibility than a larger company, give paid time off for volunteer work, or let your employee bring their dog to work. With just one employee (for now), you can find out what’s really important to them and see what you can do to make it happen. Having Tuesdays off might be more valuable to them than a 401K.
 
Ready?
By taking these 7 steps, you’ll be ready to hit the ground running with your first employee. When you’ve been flying solo for so long, bringing on an employee creates a big shift in your day-to-day business operations. As your business continues to grow, establishing these best practices now will serve you well into the future.