Launching a small business often means wearing a lot of hats: You’re the CEO, purchasing supervisor, bookkeeper, social media manager and tech support. While it may feel financially prudent to continue your business as a one-woman show, hiring staff can be the key to growth, increased income and more free time.
Not sure how to bring on new hires? Here’s what you need to know.
When Should You Hire?
It’s easy to become overwhelmed as a small business owner. That’s why Barbara Sloan, partner and COO of Manhattan Renovations, recommends not waiting until you feel burned out to hire employees.
“Interviewing, onboarding and managing new staff is a lot of work, too, so you’ll need to have the bandwidth to tackle it,” Sloan says. “Take it slow and have a game plan.”
According to Logan Allec, a certified public accountant and owner of Choice Tax Relief, this is why it’s important to start planning for future hires on day one—even if you don’t think you want employees.
“From the get-go, you should get in the habit of documenting processes and systems,” Allec says. “Once you have that library of content—i.e., an instruction manual—on how to ‘do’ your business, it becomes much easier to hire someone who can lend a hand or take over certain tasks.”
As for choosing the right time to hire, it’s vital to keep track of how much work you are handling that could be done by someone else. The moment you find yourself spending too much time on admin tasks or “trying to finish everything on the list” is the right time to start hiring.
How Do You Budget for Your New Hire?
The biggest obstacle to bringing on help is often financial. How can you feel confident about hiring additional people when your business finances fluctuate?
Compare the money you would spend on employee wages with the value you could bring to the business and with the time you have freed up for yourself.
Try making a list of administrative and other tasks you could hand off to an employee so you could focus on bringing in more revenue. From there, you might determine how much you’d need to pay someone to cover the duties on your list. Hire someone with experience that fits those tasks or, if that doesn’t work for your budget, someone you can teach. Either way, understand the minimum you’d have to spend and start there.
Sloan also suggests doing some important budgeting calculations before you make a hire. “Break down the cost of their employment and benefits into a weekly or monthly amount,” Sloan says. “Then check and make sure you have six to12 weeks of payroll you can earmark in the bank.”
How Do You Find the Right Candidates?
Hiring staff can be tough even in the best of conditions—and it can feel impossible for a solo business owner doing it for the first time. However, there are several tried-and-true methods for finding good candidates.
“A personal referral is always best,” says Sloan. “Start with your network. Ask your favorite vendors, consultants or subcontractors. Ask your clients. Post on LinkedIn and your socials.”
If networking doesn’t pan out, there is nothing wrong with posting to job boards.
The most common problem with job boards, though, is receiving a glut of responses, most of which won’t fit your needs. Recognize that you may have to take some time to sift through the responses to find the best candidates.
How Do You Navigate Taxes and Employment Laws?
Becoming an employer comes with some tax and legal implications. “When hiring an employee, you need to know your state’s rules about what rights your employees have and what benefits you need to offer them,” Allec says. “These rules may depend on the size of your business.”
Additionally, Allec explains that if you are hiring an employee, rather than a contractor, “you’re on the hook for half of their Social Security tax, half of their Medicare tax and possibly various state payments as well (such as payments to the state’s unemployment insurance fund) based on their wages.”
These issues can be tricky, especially since they can vary from state to state. Sloan recommends contacting your certified public accountant and attorney (if you already have them) to ask what you need to consider.
Alternatively, “the Society for Human Resource Management (SHRM) is a great resource,” Sloan says.
Becoming the Boss
No matter how efficient, productive and badass you are, there is only so much you can do by yourself. Solo business owners often try to do everything themselves and don’t understand the value of delegation. That lack of delegation can cost you—either money or time or both.
“It’s quite rare—at least from what I’ve seen—for even the most ambitious solopreneur to net much more than $300,000 per year before taxes and still have a work-life balance,” Allec says. “If you want to net more than that, you’ll have to hire at least one or two contractors—or work far more than 40 hours per week.”
Emily Guy Birken is a former educator, lifelong money nerd and Plutus Award–winning freelance writer. She is the author of five books including The 5 Years Before You Retire and Stacked: Your Super Serious Guide to Modern Money Management, written with Joe Saul-Sehy. Emily lives in Milwaukee with her spouse, two sons, a dog and a cat.
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