Business

How To Know When It's Time To Hire Your First Employee

Taking on your first employee is a big deal for any business. Here’s how to find the right person at the right time

By Edwina Langley

20 May 2021
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t’s an exciting time when you realise your start-up might be ready to take on its first employee. After days, weeks and months of intense work (and worry), arriving at this juncture is a definitive achievement and one to be proud of. But when do you know for sure that the time is right to expand?

Yvonne Bajela asks herself four key questions to help her calculate when it is the right time to take on a new hire. Yvonne is the VP Principal and founding member of Impact X Capital

“As with many decisions that need to be made when starting a company, knowing when to make your first hire can be daunting,” says investor Yvonne Bajela, principal and founding member of Impact X Capital. “Hiring too early can leave you stretched for cash and hiring too late can leave you struggling to reach your targeted milestones.”

It’s a fine line to tread, but there are four key questions to ask yourself, says Bajela: Are you doing so much you no longer have time to think strategically? Is there a need for someone with a specific skill set? Do you have the workload to support a new hire? Can you afford to bring on board a new hire?

If you are lacking the expertise critical to growing your company, it may be time to take on your first hire. Pictured is Tessa Clarke, the co-founder, and CEO of the food-sharing app OLIO

Get the timing right

Tessa Clarke, co-founder and CEO of food-sharing app OLIO, says one of the telltale signs that you need to make your first hire is when you realise you have become “a bottleneck that’s holding the business back”, or when you find you lack the expertise to grow a critical part of your company.

If you have been used to doing everything yourself, it is important to know your own limitations and how they are impacting your business.

For Priya Lakhani OBE, being honest about your own skillset as an entrepreneur is the first step in identifying where you should hire support. Priya is the founder and CEO of education platform CENTURY

Priya Lakhani OBE, founder and CEO of education platform CENTURY, agrees that entrepreneurs should be “be honest about their own skill set” – this will also help you identify what a new hire needs to bring to your startup.

For some founders, a first hire may stem from the desire to bring in a new perspective.

“As I was starting out with having someone to bounce ideas off if was super-important,” says Gemma Young, co-founder and CEO of Settled, a digital home-buying and conveyancing service.

“Your business is something you can’t stop thinking about. So, partly to save friends and family from having to constantly be your sounding board, bringing someone on can give you support and challenge your thinking as well.”

‘Hiring too early can leave you stretched for cash and hiring too late can leave you struggling to reach your targeted milestones.’

Pictured is Elizabeth Tweedale, the founder and CEO of children’s coding camp Cypher. Elizabeth sought the advice of a business coach to help her break down her hours spent on daily tasks and identify areas for change

Identify which area of your startup needs help

When your business starts to grow, you may find you need assistance in a number of different areas. Deciphering which is the most urgent can be a challenge.

Elizabeth Tweedale, CEO and founder of children’s coding camp Cypher, made her decision after seeking the advice of a business coach. Together, they sat down and wrote out exactly what she spent her time on throughout the week: how many hours she gave to, for instance, writing emails and accounting. She discovered she was spending up to three days each week doing graphic design.

“I never would have picked that up as something that I wanted to get rid of out of my schedule if I hadn’t laid out the hours that I was spending on that particular task,” she says.

Another way of knowing which area you need to hire for?

“Look at how much you are already spending on freelance or third-party support,” says HR consultant and coach Gemma Bullivant.

For Gemma Bullivant, it is about looking at how much you are already spending on third-party support. Gemma works as an HR consultant and coach

Define your business culture

Before you start writing job specs or meeting candidates, you need to work out what type of business environment you want to create, as this will help you to identify who is likely to thrive in your start-up – and who won’t.

It is a step you should not miss out; analysis conducted by CBInsights revealed 23% of start-ups fail because they don’t have the right team.

“If you hire the wrong people in, they will hire more people like themselves and you’ll have an organisation you don’t want to work in pretty quickly,” warns Lakhani. “Set out the culture of the company you want to build.”

Clarke recommends looking for candidates who can cope with the nature of startups: individuals who are prepared to go above and beyond “many times over”, who are willing to learn, be flexible, are comfortable with change, love a challenge and have no problem “rolling their sleeves up and getting stuff done”.

Check your responsibilities as an employer

If your financial modelling indicates you can afford to pay someone a salary, don’t forget there are other elements to consider as well, such as employers’ liability insurance and pension contributions.

If you’re short on time and already work with an accountant – or are looking to work with one – it might be worth recruiting their help for this stage.

“My number one piece of advice would be to find a good accountant that has experience with startups,” says Tweedale.

They can help you understand the financial implications of taking on an employee. If you decide not to go with an accountant and are unsure what the requirements are to get your business employee-ready, you can check the government’s step-by-step guide online.

Decide on your recruitment strategy

“It’s not unusual to first employ someone you already know – either someone you have already worked with in the past or someone who comes recommended,” says Bullivant.

But if you want to cast your net wider, there are numerous ways to find candidates, from recruiters to social media and formal adverts on job sites.

According to research conducted by LinkedIn, 49% of professionals follow companies on social media to stay aware of job opportunities. That means your own social channels might be the best place to start, particularly if passion for your business is paramount.

“I would always recommend that you advertise all roles via your own channels to your user base on social media and LinkedIn,” says Clarke.

When you advertise a role you may find yourself swamped with CVs. That might sound beneficial at first but they can be laborious to process.

“The easy apply system on LinkedIn, for example, means you may get a lot of applications from unsuitable applicants,” says Bullivant. “And a decent job ad on an online job board could attract hundreds of applications that you will need to screen.”

If the role you need requires very niche skills, it may pay to invest in a niche recruiter to access the right part of the job market. If that’s the route you decide to go down, Bullivant advises using “smaller boutique recruiters, who really take time to get to know you and your business”.

But be prepared to pay a 10% to 20% fee of the annual salary for the person hired.

Pause the hiring process if you’re not ready

If you decide, after careful consideration, that it is best to hold back on hiring for the time being, make sure you keep your eye out for potential employees all the same.

“The best talent often isn’t on the lookout for new roles,” Bajela says. “So it’s important to build connections and nurture relationships for when a specific hiring need arises.”

Lead image: PhotoAlto sas / Alamy Stock Photo

The Short Stack

Your first hire is crucial: take the time to identify exactly what skills your start-up needs, the business culture you want to create and the best method of finding candidates.

By Edwina Langley

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