7 Clear Indications It's Time To Hire Your First Employee


It’s likely you started your small business because you saw a need, had a solution, and recognized the opportunity to provide your solution and earn income for your family. In time, you probably realized that your small business is more than just a tool to generate income for yourself, but that it can positively impact others and create a legacy for your family.

Part of pursuing that legacy and securing your own American Dream includes growing your small business. That growth often means hiring new employees.

But how do you know when your small business can or should start the hiring process? Should your new hire be an independent contractor or a full-time employee?

The mindset behind the hiring process is just as important as the hiring process itself in helping you get the right employee in the door and supporting your role in making good decisions for the company.

Here are seven clear indicators that you are ready to spend time hiring the right person for your small business.


How to Know When to Hire Employees for Your Small Business


1. You're Doing Busy Work, Not Visionary Work.

The job of the small business owner is to guide the business with a strong vision. Business owners may have to do it all at first, but eventually, they should be looking for ways to help the business grow, network, and build generational wealth.

If you are spending more time answering emails and figuring out spreadsheets than casting a vision, you need to look at high-quality candidates who can free you to work on the growth aspects of the small business.

2. Your Customers are Complaining.

Customer service is the backbone of a small business. In the beginning phases of a company, customers often feel cared for and love attentive customer service. These customers return and recommend your business to others. Your business grows as new customers find you.

If you aren't prepared for the new business, this growth can have a negative impact on customer service. Orders might go unfulfilled, phone calls go unreturned, and emails get lost in the shuffle.

If you're noticing an uptick in customer complaints about poor service, you are ready to start hiring employees or adding new hires to your payroll.

  1. You're Avoiding Tasks.

Small businesses are filled with many tasks. Some of the work you will enjoy, some you will hate, and some you will feel incapable of doing. Often, feelings of dislike or inadequacy around certain tasks lead to avoidance.

You might put off dealing with registered trademarks or marketing or business insurance because you're overwhelmed or because you'd rather be serving customers. Rather than feeling guilty, recognize that this avoidance is a sign that it may be time to hire your first employee. You need to add someone to your team to manage the tasks that aren't part of your skill sets.

  1. You're Forgetting Important Tasks.

Sometimes tasks aren't avoided, and instead, are flat-out forgotten. As the business size increases, the workload skyrockets, and one person can only do and remember to do so much. There's something to be said for prioritization here, but at some point, even excellent prioritization skills aren't enough.

If you're operating at your personal maximum capacity, inevitably some important pieces will be forgotten while you focus on the most pressing demands.

For example, when it's time to file taxes, you might forget your social media postings for the week or miss an important meeting. Forgetting important tasks is another indication that you are at the point of looking through great candidates to hire for your business.

  1. Your Products/Services are Behind Schedule.

Sometimes your products or services get behind schedule due to circumstances beyond your control. Supply chain issues, rising costs, or a shortage in the market will lead to inevitable schedule changes. If market forces are creating changes, more employees might not solve the problem.

On the other hand, if you are dealing with production getting behind or services being dropped because you are overloaded with work, it's likely you've accidentally become the bottleneck in your business. This bottleneck feeling that you are running behind because you just can't do it all yourself anymore is a clear indication that the business needs to add your first employee to the payroll.

  1. You're Experiencing Cash Flow Problems Due to Poor Launches.

Both digital and physical products rely on launches that take months to manage and prepare. The process of launching requires businesses to create a wide variety of assets ranging from social media posts to fully developed websites.

In addition to content creation, companies have to work with a range of technologies to produce and distribute the content pre-launch and during the launch.

The moving parts in a launch cause struggles for larger businesses that have the benefits of multiple employees. Running a launch with no or few current employees will likely create problems for a small company.

If you run frequent launches without a team and notice that you're losing money or experiencing cash flow problems because you can't keep up with the job, you need help. If you already have contractors on your team, it's highly possible you need to start hiring employees.

7. Your Small Business is Losing Momentum and Money.

The cumulative effect of trying to bootstrap your company by not adding employees to the payroll is a loss of momentum and money. If you are dreading working in your own company because you're overstressed and losing money, you need to make a change.

Do an analysis of your business. You may be losing momentum and money due to your concept, product, service, or market. Try to take an objective look at your operations as if you weren't the owner or co-founder, what would an outsider see as red flags?

If your analysis points out that the problem lies with your being understaffed, you should be the first person to acknowledge the solution. You need to bring on your first employee or hire employees to complement your current staff.


How To Know Whether Your First Hire Should Be Independent Contractors or Full-Time Employees

As a small business owner, hiring your first employee can feel like a daunting process.

You want to make certain the new hire is right for your company, that you have plenty of work for them, and that you can pay them for the job over the long term. Before you decide if the work you have is perfect for a 1099 or w-2 hire, make sure you have clear expectations and a legal framework in place.

These three signs will help you determine if you should hire independent contractors or full-time workers.

All New Hires Need a Specific Job Description

Whether you decide to go 1099 or W-2, you need to make certain that your new hires have a clear job description. This can be done through a checklist, an employee handbook, or other project management tools.

If you are not clear on the specific tasks that need to be done, your new hire will be unclear on what their day-to-day responsibilities are. You will both be frustrated and waste valuable time and money.

Provide your employees with a focused job description so they can manage themselves well, and that benefits you and your clients.

Payroll, Employee Benefits, Labor Laws, and Other Considerations

Bringing on employees in a full-time capacity involves more than having enough work for the hire. You are assuming the responsibility to manage cash flow to support a full-time salary, employee benefits, social security taxes, retirement plans, and more.

While you are taking a risk, that balances against your expectation that your move to hire the new employee will pay for itself and benefit the business exponentially in the long run.

With either a contractor or w-2 employees, you'll want to make certain you know your labor laws. A good business lawyer will empower you to hire with confidence, guide you through obtaining an employer identification number, and provide you with clarity when you do decide to hire your first employee.

Hiring an Independent Contractor

Hiring 1099s is a good starting point for testing the hiring and managing process. You can hire a person for five to ten hours a week to take on smaller jobs that will free you to concentrate on growing the business. At this point, it's likely you have enough steady work to keep the independent contractors moderately busy but not enough work to bring them on full time.

Working with independent contractors is a great way for you to test your capacity and ability to manage others prior to hiring your first employee and will help you discover the skill set your business requires for a full-time position.

Hiring contractors also allows you to train them to move into your business. You have the opportunity to develop a relationship that gives you insight into their character and personality. You'll discover how they deal with customers and pick up on any red flags that might hurt the business if you hired them full time.

The types of contractors many businesses hire as a first move include virtual assistants, copywriters, web designers, social media managers, editors, and bookkeepers. As your business develops, you'll begin to see which contractors are potential w-2 employees.

Hiring a Full-Time Employee

Eventually, you may need to hire one or more employees full-time. For product fulfillment or a service-based business, the choice to hire may be obvious. You need workers to fulfill a certain amount of products or serve a certain number of customers in a certain time frame.

Other positions such as an executive assistant or copywriter often grow organically. As your company grows, you will see which positions are needed and where your services or messaging is lacking - that's where you'll hire.

For example, if you are adding more hours to your social media manager's plate each week and seeing success with your audiences through each increase, you will recognize that the job position is important to your ongoing success. Hiring the social media manager full-time as an employee instead of maintaining them as a contractor benefits you both.

The choice to hire part-time or full-time workers is highly dependent on what you need, what your business needs, and what your vision is for the future. You want to enter the hiring process with a mindset of success and growth, not worry and desperation.

Small Business Owners Fuel the American Dream

Making the choice to hire new employees can be intimidating. There are payroll costs, employee benefits, and legal paperwork hassles to consider, and that alone might initially hold small business owners back. However, as the visionary and creator of your own American Dream, it is your absolute responsibility to make decisions not out of fear but out of what's best for your business, your clients, and the people who are most affected by the positive impact your business makes on the world.

As you hire employees, you are not only expanding the potential for opportunities for your company and your legacy, but you're creating an opportunity to earn a livable wage to a new employee where there wasn't one before.

Your small business is a tool that provides you and your employees the chance to achieve success and prosperity through initiative, creativity, and determination. Will you use this tool to create maximum positive impact in the world?

If you need help growing your legacy, I'd love to hear from you. Just email me at [email protected]


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