As a startup or SME, building a business comes with a million minefields and more. Not a day goes by without a new challenge. That’s just business and it isn’t easy. It is, of course, worth the effort because of the day to day job satisfaction, having the control over your own career, making a difference in the world and of course, the bottom line – the money.
Hiring somebody to help you at some point is inevitable unless you plan to work as a freelancer entirely. There are of course potential pitfalls to this process because you are essentially investing money into something that may not pay off, which is a legitimate business risk. You do need to have help in order to grow your business though so the risk is worthwhile and entirely minimal as long as you go about it in the most sensible and well-informed way.
If you have reached the point in your business where you know you need to hire somebody, then these pointers will help you get it right:
The Legal Bit
Before you do anything else you have to think about the legal side of employment so that you do not put your business at risk of prosecution when you hire somebody.
According to the government, these are the seven legal ‘must haves’ you should be aware of when you hire staff:
- You have to pay your employee at least the National Minimum Wage.
- You have to ensure your employee is legally allowed to work in the UK.
- You have to check if the job you are offering requires a CRB check which is now known as a DBS check.
- You must have employer’s liability insurance as an employer.
- If you have your employee working for you for longer than a month then they must receive a written statement of employment from you.
- You have to let HMRC know that you are an employer and you must do this any time up to 4 weeks before your employee/ employees are paid.
- Check to see if you place your staff into a pension scheme.
There may well be other procedures you have to go through before you can employ staff. You should also ensure you are familiar with discrimination laws before beginning your hiring process. Checking you are legally sound before and during employing a person should be your number one priority.
The Financial Bit
Hiring staff costs money, there’s no doubt about that. There is more to deciding whether or not you can afford them than just figuring out how much to pay them. You will have to spend your own time training and helping them get settled in, so you have to account for the costs of your own time as well. There is also the additional cost of space and tools for them to work in, plus setup costs like legal checks and then insurance costs all to take into account.
How much you pay the employee though will be the biggest task to work out because it will be your biggest expense. What it will cost you depends on the industry you are in, the expertise you require, the budget you have, and the hours you want the employee to work plus other unique factors. This ‘How To Calculate Employee’s Wages’ guide will help you get started. It may be that the growth you will get out of hiring an employee is great, but you need a little help financing the initial employment in order to get those benefits.
If that is the case do check thoroughly that there is no way you could wait a little longer and finance the employment with what you already have. If you absolutely can’t find it from the business earnings, then look into all the usual options like crowdfunding, invoice discounting/finance, equity finance and other lending and have those options lined up so the wages for the employee are there – you don’t want to fall into the legalities of not paying an employee.
The Hiring Bit
Hiring the right person is hard. It doesn’t get any easier when a business gets bigger because people are individuals and a good fit on paper is not always a good fit in real life. It is such an important decision because your business is so important. Everyone who works with or in the business contributes towards its success so they have to be right.
One key piece of advice is to never trust your gut. This might seem contrary to advise you have seen elsewhere, but in this day and age, you cannot trust your gut as a primary hiring tool. The more screening you can do, and the more trials you can afford to pay for, the better. With a startup or SME there just isn’t room to hire the wrong person so, the more you can truly align your first employee with your business the better. Do not just trust a good CV and a good interview. Utilise as much information and guidance as you can. These videos, articles and free employment contract templates are a great place to start:
- Facebook founder Mark Zuckerberg talks about the qualities he looks for when he hires a recruit
- Regina Hartley talks about why the perfect hire might not have the perfect resume in this TED talk
- 7 Hiring rules Richard Branson lives by in this Linkedin article by Vivian Giang
- Detailed Webinar by CSUB SBDC on 5 Critical Steps To Avoiding Costly Hiring Mistakes
If all else fails, the budget for recruitment help from an expert in your industry, or consider outsourcing the work to a freelancer until you’re confident you have the right employee lined up for the job.
Take Your Time, Your Business Depends On It
With so many amazing potential employees out there and so many ways to employ people remotely if you want to, you essentially have the world at your fingertips to utilize and ensure you get the perfect employee. Still, it’s one of the hardest things to do regardless of your business size. The best thing you can do to avoid falling victim to hiring the wrong recruit or hiring in a way that is not legal, is to do your research and then do some more, then more still. The more informed you are, the better your chance of hiring somebody whilst staying within the law, and hiring somebody who is right for your business.