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Knowing when to hire your first employee

Image of a business owner taking a new employee through the hiring process

4-minute read

As the owner of a small business, your 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 as protecting your cash flow is vital
  • Knowing when not to hire will help you work out if you’re really ready
  • Consider carefully if a new hire will actually add value to your business
  • Be specific about your business needs to identify the optimum skillset and cultural fit.

What are the signs that it's time to hire staff?

There are many signs to look out for that will signal you're ready to find your first employee – as well as signs that you're not. Many Australian small businesses struggle or fold within their first three years due to cash flow issues, so you need to be certain the time is right to hire help.

We've listed five of the crucial pointers here.

1. You're more than just 'really 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 businesses fail, so being run off your feet with work isn't necessarily a reason to recruit.

If you are overloaded, make sure you're busy with the right kind of tasks that are contributing tangibly to your business growth. Repetitive daily and weekly jobs such as bookkeeping could be the first to be delegated to someone else, leaving you to focus on bringing in sales to keep the business going and growing.

2. You're clear about where you need help

Don't hire someone when you're desperate. You'll be more likely to make a rash decision – such as hiring the first person who walks through the door.

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

And think seriously about whether a co-owner could be the answer – someone who can share in the highs and lows of your business by making decisions, offering perspective and covering the areas you're not so strong in.

3. You're starting to turn customers away

Turning away business for short-term reasons is a bad thing, as you may never see that customer again. You've put all that effort into trying to get them through your door, only to have to apologise and turn them back around and most likely in the direction of a rival.

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

4. You dread opening feedback emails

When you do have a consistent customer base, what happens if you start receiving complaints?

First, be thankful that these customers 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, unanswered phone calls, poor service – perhaps this means it's time to get someone else to help address these issues and smooth over your customer service issues.

5. 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.


To sum up

If you do take additional employees 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. But before you do anything, check out our cost of hiring article and put together a hiring budget.

Read more

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? 

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.

5 tips for employee onboarding

Have you just hired a new team member? Try these 5 tips to help them hit the ground running.

Things you should know

This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business. Westpac does not endorse any of the external providers referred to in this article.