Business Management / Human Resources

How to know when to hire your first employee

Eric Goldschein

Updated: Jan 23, 2020 · 7 min read

Toolkit for download in this article

business management hire first employee

For most entrepreneurs, starting out is hectic. Closing sales, raising brand awareness, facilitating operations, forecasting the financial future, and every other business task falls directly to you. As such, it can be challenging to manage and grow your business while maintaining any semblance of work-life balance.

Nonetheless, chaos is a necessary hurdle when you launch a business, and just because you’re busy doesn’t necessarily mean it’s time to bring on your first employee. Between finding the time to review resumes, interview candidates, and set up a salary and benefits system, you might find a new employee winds up preventing rather than promoting growth. Contractors remain a viable option for enlisting help without formally growing your team.

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Before you take the step of hiring your first employee, you should be positive it’s the right move to make. In this article, we shed light on some indicators that the time is right.

You can write a job description

You can’t start the hiring process without posting a job description—but can you even write one in the first place? Do you have enough work to provide someone eight hours of work every day? If you can’t clearly articulate what a new employee will do for you and your business, you probably aren’t ready to employ them.

Before you place an ad, try to write a complete job description that you could discuss with a prospect during the interview. It should be realistic and general, a representation of what your business needs in terms that anyone in the industry can understand. (That’s to say, no jargon!) If it’s been awhile since you looked for a job, take a look at postings on job boards like ZipRecruiter and Indeed to get an idea of what your description should include.

One good way to consider responsibilities for a new role is by making note of the things that you seem to put off. If you often forget or delay shipping orders, you probably need someone to run your inventory or, better yet, someone to handle your logistics entirely. Ditto for responding to customer service requests and quality control issues.

Additionally, this process is as valuable to determining whether you need somebody as it is to ultimately onboarding them. Writing out what an employee will do in a 40-hour workweek will help you understand your own weaknesses, identify opportunities for growth, and make it easier to train the right person when they do come on board.

You need to generate more revenue

An employee should make money for the business or save money for the business. If you have a degree of doubt that it may be more expensive to hire an employee to do something than to do it yourself, it’s probably not time to hire an employee.

When you’re starting out, generating revenue is more important than saving, so any employee you bring on should be someone who can directly lead to selling more product. That doesn’t necessarily mean a salesperson (although if you’re not the sales type, maybe it does).

You may already have a great product but need marketing help to reach an audience of buyers. You may have the blueprint for a great product or service but need help from a designer or developer to actually build or execute your vision. Maybe customers are having a hard time understanding how to use your product, in which case you may want to bring on a copywriter or a customer support agent to help prevent returns.

Your first employee should be someone who will help you make money and increase the viability of your product or service. It’s up to you to identify the best person to generate revenue for the business.

You’re turning down work or customers

Regardless of what kind of business you run, if you can’t meet demand, it’s time to bring on a new employee. Whether you run a marketing consultancy, a tax service, or you sell finger puppets, reaching the limit of what you can provide or make is a surefire sign you’re ready to expand.

As one person, you have a finite capacity. When you’ve reached that capacity, the quality of your work may suffer, and you may find yourself losing customers. That’s a great way for your business to fail.

When you realize that you’re starting to turn down work or telling customers an item is sold out, it’s time to give yourself a promotion. Hire somebody else who can handle a chunk of the labor, in whatever capacity you need, so you can oversee the big picture while still keeping a foot in the trenches.

Losing clients or customers could very likely equal or surpass the cost of bringing on an employee, so don’t let it get to that point. Your aim is to grow, not shrink.

You need specialized skills

You were talented and skillful enough to build your business to the point that you’re considering bringing on your first employee, but that doesn’t mean you know how to build a customer service infrastructure. Or a website. Or manage a warehouse. There are many moving parts to any business and, chances are, you’re not an expert at every one of them.

One of the most important skills a CEO should have is delegation and knowing when somebody is better than them at something. If you’re a talented sketch artist who built a business by producing finger puppets of your drawings, that’s fantastic. An operations specialist will know how to reduce your production costs and increase your shipping speed. A growth marketer will know how to attract new customers. A web developer can build your branded online store so you don’t have to live on Etsy anymore.

Of course, you can easily find people to do many of these things on an as-needed basis. That’s a smart, effective way to limit your expenditure as you’re growing. The trick is knowing when it’s time for one of those contractors to become a full-time employee.

First, identify precisely what you need in a candidate. Don’t just say, “I need someone to grow my online business” because that applies to literally millions of people. Instead, ideate your ideal candidate. “I want a growth marketer with an ecommerce background, SEO expertise, and has managed large-scale paid marketing campaigns on Facebook, Google, and Twitter.” That’s more specific and can also help inform the job description you’re going to write.

Needing specialized skills requires knowing what those specialized skills are. Do a little research into how different companies have addressed the general need you currently have. Understand some of the specific skill sets you need and use them to identify the employee you need.

The bottom line

For new entrepreneurs, every day is a challenge. You rely solely on yourself to build your business and maintain your livelihood. But the point of building a business is to grow and when you’ve reached the limit of what you can do alone, it’s time to bring somebody on to help the growth continue. Now you know when it’s time.

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