How to hire your first employee…when you think you can’t afford to!
15 minute read.
Here’s the thing. There is a big difference between working for yourself and being a business owner. They’re both hard work but the work is different.
Working for yourself often means you have a skill and you exchange that skill for money. For example, you’re a yoga teacher so you run the classes, you’re a graphic designer so you design the logo or you’re a coach so you coach your clients.
Building a business is different. It’s all about building a profitable system of value creation. This means you build a way to consistently add value to your clients and generate enough revenue, profit and cashflow to invest in growth.
For example, let’s say you’re a yoga teacher. Instead of running the classes yourself, you hire yoga teachers who can do this for you. And you create systems and processes to ensure the quality is consistent and in line with yours and your clients expectation. For example, you provide branded T-shirts for your team, you train your new teachers in your unique methodologies and you create training guides or checklists to make sure it’s all consistent.
Can you see how these two approaches differ? In approach #1, you’re doing the work. In approach #2 you’re building a business.
In approach #1, you’re swapping your time for money. And in approach #2 you’re putting in place people, systems and processes you can oversee.
Guess which option is scalable? We’ll be exploring this theme of scalability in future articles but for now, let’s look at the six stages of hiring a new member of staff…even when money is tight!
Step 1 – Plan your structure chart
The first step has to be to map out the upcoming structure of your business. This might sound mad if hiring your first employee feels like a stretch but it’s important.
When people hire their first member of staff, they always look at what’s stressing them out the most or what’s taking up most of their time. I do understand that approach but remember, I’m in the business of building scalable businesses. So wouldn’t it make more sense to map out the future of your business and hire for the role that’s going to make the biggest difference?
For me, I hate admin, accounting and admin. Yup, said it twice. But hiring a VA won’t grow my business. Yes, it’s freed up some of my time but it’s not a business growth activity. Hiring a video editor to film and edit more videos so I market my offering to more people will grow my business. So, even though I’m a coach – my first hire was a video editor. My second hire was a marketing executive.
Map out your structure chart for the next 18 months. Whatever you expect will happen so being ambitious, be bold and be clear. What knowledge, skills and experience are you bringing into your business.
Step 2 – Start budgeting now
You’re going to hire an employee. If you want to build a truly scalable six figure business, you need to accept that. So think about what you can afford to pay, add on an amount to cover national insurance and £1000 for equipment and supplies and then divide that amount by 12.
Let’s say you’re hiring someone at £20,000. Their net pay might be around £1300 a month but you’ll pay a few hundred more on top of that towards their national insurance and their pension. When you add on £1000 for their lap top and the £400 a month needed for their desk you realise you’re actually going to need closer to £2000 a month to hire them. Perfect. Now you know how much additional revenue you need to bring in to cover that person.
That might be one more sale of your online course each month or 10 sales of something else. Whilst moving on to step 2, start planning out how you’re going to generate those sales. Because you will.
Step 3 – Write out your profile and role duties
Next, write out the role in detail. What are you expecting this person to do? What skills do they need? What experience are you looking for. There are lots of templates online to get you started but don’t just add it because it seems right. Map out the role you have in your business.
And be sure to add the salary, working hours and location. Your aim here is to get as many people as possible (who are right for the role) to apply. Leaving off the most fundamental information (wages) will stop people from applying and will lead to people applying who aren’t a right fit. Even if the salary is minimum wage because it’s all you can afford, be honest and put it out there. Your goal here is to attract the right people to apply.
For this stage, you might want to make a video to tell people more about the role. Or you might want to include links to your social media feeds so they can find out more about the company. They’re considering you just as much as you’re considering them.
Step 4 – Post your job on paid job boards
This next step might seem crazy. Even before you’re ready financially. Even though you might not have the money in the bank right now, start advertising for your first hire. It can take 2-6 months to find the right hire and bring them into your business officially. Plus, when they start, you pay them at month end meaning you have 30 days from the moment they start to get their wages together.
Now I am not advising you to play it this close to the line. This person is relying on you. What I’m saying is you have to start the process now and there is time. We manifest on the physical plane by taking physical steps. This is a message to the world that says ‘I am ready’. We always rise to meet expectations so make this expectation clear. This is happening.
I would recommend posting your job on paid job boards like TotalJobs and Monster. Don’t rely on social media postings and recommendations from friends. That pool is never going to be big enough. Even though it costs to hire people through job boards (often in the region of £180), you’re going to get a lot more applicants and the quality will be much higher.
Do not settle for ‘that will do’ when hiring. Ever. Always strive for the right person with the right attitude and the right skill set. They are out there.
It took me six months to hire my video editor and I’m glad I started looking when I did.
Step 5 – Start ramping up sales
I know it can feel like a Catch 22. You want to hire because you’re too busy to manage the work yourself, but you can’t afford to because you’re a small business. And yet you want to bring in more work but you can’t because your diary is full! Well, don’t worry! All entrepreneurs face this same conundrum. If someone else has figured it out, so can you!
This is where business planning is important. You need to know how much work you can deliver with what team in place. If you stay as a one man band, your earnings will likely be limited. As you hire, earning don’t necessary double right away but you should make sure they increase once the initial training period is complete.
When you plan out your business model, you want to map out exactly how your business will grow. For example, I knew that hiring a video editor would mean I could ramp up marketing, bolster my brand AND move onto more sales activities because I freed up a lot more time in my business. As I started the hiring the process, I slowed down my own video editing efforts and launched a whole new product. When my video editor started, sales were already coming in from the new product and he could take up the mantle with the video editing. People rarely noticed a difference. If anything, we became a lot more consistent with our video marketing.
Step 6 – The interview process
When it comes to interviewing people, preparation is important. And so is everyone’s time.
I recommend a three stage process: telephone interviews, face to face interviews and reference checks.
Before going to the trouble of meeting 5-10 people face to face, arrange a 15 minute telephone interview with them over the phone. It’s amazing how much you can learn in a telephone interview. Honestly, some candidates don’t turn up, some can’t tell you anything about your company when you asked and some are absolute frickin’ rockstars.
Write out a list of questions and be sure to ask each candidate the same question. Make a note of their answers. And wait until you’ve interviewed all of them before deciding on who to take forward.
A few tips:
Don’t spread this out over 3 months. People who are looking for jobs won’t stick around! If you leave it too long before these stages, you might find your top candidate is unavailable when you get in touch.
Be a good person! If you decide not to take a candidate forward, email them to let them know. You don’t need to go into detail. But let them know. You never know how you might cross paths in the future and even though they’re not a customer, they’re still having an experience of your brand. So be a good person and act in line with your brand values.
For face to face interviews, why not schedule them all into one or two days so you can see everyone in a short time frame and make a quick decision.
I normally bring three or four people back for face to face interviews. I invite them to my offices. I ask them a series of competency based questions (E.g. Can you tell me about a time you led a challenging project?) and I score the candidate 1-5 for each question.
I also give each candidate an assessment relevant to the job. For example, for our marketing executive vacancy, I asked each candidate to watch a vlog and do the write up. What better way to assess their ability to do the job?
A little note on this. There are laws to be aware of. For example, you can’t ask people where they live or how old they are (this is totally irrelevant anyway). And you must protect their data in line with the new data protection laws. Don’t be leaving their telephone number out on the table for people to see!
Step 7 – Welcoming in your new team member
When you’ve made your decision, call your candidate and offer them the job. This is my favourite bit! Then follow up with an email and an official offer letter. In the offer letter you want to make the role title, salary, key duties, place of work and working hours very clear. When they accept, you can prepare the employment contract. There are templates available online but I’d recommend getting one from an employment lawyer or HR specialist.
Then, get to work outlining their role profile and objectives. When they start, you want to be able to sit them down and be very clear on their role and what’s expected of them.
And here’s a very important part a lot of people miss. Don’t leave them to guess. It’s your business and you’ve been running it for a while. Not only do you have a certain way of doing things but you have a lot of experience. You know what works best and what your clients have come to expect. You also know your vision and how you’re going to hit it.
I recommend typing up key tasks as process notes. And I love making checklists to keep people on track in the first few weeks. It might sound over the top but there are lots of benefits:
- The new starter has absolute clarity on the standards in your business. They don’t have to guess.
- Training people up is a lot quicker! You only have to show them once or twice and then ask them to give it a try using the process notes.
- If that person leaves or gets promoted, it’s much easier and faster to bring in the new person.
And remember, it’s amazing that you’re in business and paying your own way in the world. The fact you’re hiring is even more amazing. It’s challenging, I know. But you’re doing it. You’re figuring it out. And you’re creating jobs in the economy. That’s pretty special.
Lisa Bean is the founder of Expansion Business School. Teaching purpose driven entrepreneurs how to build scalable six figure businesses. If you’d like to find out more, hop on the brand new masterclass she just created: 7 Stages to Six Figures.