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Knowing when to hire your first employee

5-minute read

The timing has to be just right: hire your first employee too soon and you risk starving your growing business of vital cash flow. Leave it too late and your hard-won customers may end up going elsewhere. So how do you know when to bring someone in to help share the load?

key take-outs
  • Make sure hiring doesn’t stretch finances too tight – protecting your cash flow is vital.
  • Knowing when not to hire will help you work out if you’re really ready.
  • Will a new hire add value to your business? Be specific about your needs and match by their skill set and cultural fit.
     

There are lots of signs to look out for. Signs that will let you know you’re really ready to find your first employee – as well as signs that you’re not. With 50 per cent of Australian one-person businesses folding within three years according to Indeed, you need to be certain the time is right to hire help. We’ve listed some of the crucial pointers here.

You need a better reason than ‘it’s busy’.

Hiring your first staff member too soon could mean you’re paying them money that could be used to keep your business afloat. Running on an empty bank account is one of the main reasons why new companies fail, so being run off your feet with work is not necessarily a reason to recruit.
 

Instead, make sure you’re busy with the right kind of tasks: repetitive daily and weekly jobs that could be delegated to someone else, such as bookkeeping, leaving you to focus on bringing in sales or investments to keep the business going.

Knowing the ‘who’ is as crucial as the ‘when’.

Even more important, don’t hire someone when you’re desperate. You’ll be stressed and liable to make a rash decision – like hiring the first person who walks through the door.
 

When you’ve got an idea of what you need help with, you’ll be able to pinpoint the role you need to fill. When you find yourself getting bogged down with replying to customer questions, or updating social media channels, or writing marketing copy, it’s time to find a whizz in those fields.
 

Think seriously about a co-owner, too. Someone who can share in the highs and lows of your business by making decisions, offering perspective and covering the areas you are not so strong in. They may also be able to inject capital, or at least work for little or no pay until the business can afford it.

You’re starting to turn customers away.

This is a bad thing. All that effort and cash spent trying to get them through your door, only to have to apologise and turn them back around. You’ve probably just sent that potential customer to a rival.
 

Keeping customers is easier and cheaper than finding them in the first place. Turning them away before you even have the chance to build a relationship with them means you need to think about hiring.

You dread opening feedback emails.

Say you do have returning customers. What happens when they start complaining? First, be thankful that they came to you instead of going elsewhere. Second, look at the reason, not the sentiment. If you’re seeing the same comments over and over again – long waiting times, poor service, less-than-perfect product – perhaps this means it's time to get someone else to help smooth over these customer service issues.

You lack time to focus on the bigger picture.

Maybe you’ve spotted a gap in the market or a new way to innovate. The problem is, you’ve got your hands full with the day-to-day work you already do. By yourself, you have limited resources, which means there’s little room to grow. But with someone else handling those business-as-usual tasks, you’re freed up to help take your business to new heights.

 

If you do take someone on, make sure you give them a specific role with clear objectives. That way, they’ll be better placed to deliver on expectations, allowing you to focus on where your business is going and how it’s going to get there. It looks like there are exciting times ahead!


Read more

Working out the cost of hiring

You’re ready to take on your first employee. Before you post that job ad, make sure you understand exactly how much a new hire could cost you with this helpful guide.

Part-time, full-time or casual, what employee do you need?

Your business is itching to grow, and it follows that you’ll need extra staff to help you get there. But do you know which type of employee will best suit your needs? 

Planning for business growth

The primary reason for running your own business is to make a profit, however this requires strategy and planning to achieve a targeted return for your efforts.

Things you should know

This article is a general overview and should be used as a guide only. We recommend that you seek independent professional advice about your specific circumstances before acting.