Startups, When is the Best Time to Hire Your First Employee?

There you have it; the question. When is the right time to go from a one-person band to an employer of one or more employees? In other words, when do you transition from sole trader to SME? It’s a big decision and one that carries costs and responsibilities, as well as opportunities, so it pays to get it right.

Unfortunately, no fixed answer works for all businesses. Some start-ups have employees from the word go, while other limited companies trade for years, decades even, without any formal employees beyond the business owner.

If you are looking to make your business more attractive to prospective employees, investing in your marketing can help build your brand’s reputation, and, ultimately, attract more talent. 

There are several signs that could indicate the time is right to hire your first employee. For example:

1. Overwhelming workload:

Once the personal workload becomes unmanageable for you and/or your cofounders, something has to give. Long hours, evening, and weekend work are the accepted costs of establishing a start-up. However, long-term overwork can lead to burnout and exhaustion, which are detrimental to your health and your business. Busy business owners also frequently sideline important administrative and reporting tasks, which can lead to missed tax deadlines, poor cash flow management, and additional stress. If you are working long hours and still not getting your work done, or are unable to take time off, an additional team member can help relieve the pressure.

2. Identified skills gap:

As your new business evolves, you may encounter areas where specific expertise or experience is lacking. This could be marketing, website development, software, or customer service. Sometimes, it’s more cost-effective and time-effective to train yourself in the skills, but in other cases, hiring an employee with the right background can fill these gaps more cost-effectively and enhance your productivity.

3. Sustained business growth:

Consistent revenue growth and a steady increase in customer demand are strong indicators that you are doing something right with your start-up, and also that your business is ready to expand. If your projection is for continued growth, or you want to actively plan to grow, it’s wise to start building a team that can support and further accelerate this momentum.

Impact on your business

The decision to hire your first employee has a profound impact on your business’s growth trajectory, management responsibilities, and culture. Your first hire will set the tone for future recruitment and can help shape the long-term direction of your business, enabling you to achieve objectives faster and more efficiently.

However, recruiting staff in-house isn’t the only way to grow a business, bridge a skills gap, or distribute tasks.

It may, for instance, be more cost-effective to outsource some elements of your operation or work flexibly with contractors or freelance workers. For example, working with a marketing agency is usually less expensive – and certainly easier – than hiring an entire marketing team in-house, and it is often more efficient to outsource elements of a manufacturing process rather than invest in an expensive plant.

Recruitment is one potential solution to an operational challenge. To find the right solution at the right time for your business, look for the solution that gives you the best outcomes in all the following areas:

- Return on investment/cost management

- Flexibility

- Control

- Expertise

In practice, many SMEs adopt a hybrid model in which they recruit a core team while outsourcing some functions (marketing, accounting, content etc) and use contractors and recruitment agencies to bridge temporary gaps and spikes in demand.

Find out more

JDR provide marketing and business development support to SMEs across the UK. To find out more about our services and how we can help, please contact one of our team today by clicking here.

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