So your start-up is growing and it’s time to staff up, but how do you make the leap from self-employed to employer? Business Takeaways spoke to some start-ups who’ve made the transition and here are their top tips…
- Get the timing right
Says Alex Bergh of LED lighting firm Lampadina: “It was always the intention to take on staff when we felt comfortable with the cash in the bank and that we had a definite few months as a ‘buffer’ as we continued winning new work. Luckily, we found ourselves in this position just as the time taken on admin, paperwork, invoicing and so on whilst still having time to win new work became very difficult.”
James Kinsella of web-to-print business instantprint adds: “The decision to hire your first employee tends to be one of the largest businesses make in the early stages. Normally, the question isn’t whether you should take someone on at all, but when is the right time to make the move?
“For us, the decision was relatively straight forward when we analysed our situation. We’d reached the point where we were working 90-100 hours every week, most of which was processing customer orders. It was clear that we were working in the business, not on the business. When running a business, you must dedicate time developing it, and instead we were too tied up on day to day tasks.”
- Use your network
Neil Parker, Managing Director of online retailer of car accessories DriveDen, looked closed to home for his first recruit. He explains: “For the first couple of years, I ran my business alone from home. But as the orders began to grow, I needed an extra pair of hands — and someone with expertise in web and graphic design. Luckily, I had a friend who had recently graduated in the subject, and was working close by.
“One of the main advantages of hiring a friend is trust. I also knew a lot about his experience and skillset, and so exactly how he would add value to the business. Plus, especially when there’s just two of you, it’s really helpful to get along. Working together can put strain on a friendship, but I think everyone realises this and puts in the extra effort. It’s also important to set out from the beginning what you expect from them in the role.
Aaron Dicks, co-owner of digital marketing agency Impression, also made the most of his network: “When it came to the recruitment process we were absolutely adamant that we would stay away from recruitment agencies, a rule that we still go by today. I actually knew Rob Tomkinson, our PR account manager, from a previous job and I knew he’d be a great fit for the company. Hiring Rob meant that we were able to expand our client offering as well as raise our own brand awareness.” Impression now has 24 members of staff.
Alex Bergh agrees that a good network can be a massive help when hiring, saying: “I’ve been in my industry for a number of years so I had contacts; hiring wasn’t difficult as I knew exactly who I wanted to work for me.”
- Mould your recruit
Remember that getting recruitment right can be a challenge, whatever stage your business is at. Steve Walker, owner of Best at Flooring, comments: “I have always considered people to be a company’s greatest asset, and we are determined to hire the right candidates that want to develop at our company. The biggest problem in recruitment, however, is being able to find the perfect people in the first place. I have tried a multitude of approaches; advertising online, in newspapers and shop windows, and using recruitment agencies, all with mixed success.
“There have been a number of occasions when we’ve thought that we’d found a great addition to the team, only to discover that their employer has countered with a better offer at the last minute, while I have to admit that I’ve lost track over the years of the number of no-shows at interviews.
“With this in mind, my preference for recruitment is for bringing staff up through the ranks. By hiring someone at the start of their career, you are able to help them grow as both employees and people. They have the ability to undertake training courses to learn new skills, and to update their knowledge and progress in the company; giving them something to aspire to and aim for.”
- Recruit in your own image
James Kinsella points out: “Everyone will always tell you that it’s critical to hire the right people, but give very little detail on what ‘the right person’ means. Is it skills, previous experience or qualifications?
“In our experience the most critical factor is finding someone who holds the right values that are aligned with the businesses aims and ambitions, and will fit in with the team. Many years ago we went through a stage of hiring based solely on skills and experience, which lead to friction down the line when their values didn’t match ours, leading to us eventually parting ways.
“My recommendation would be to focus on these values in the interview process, and move away from the traditional skills and experience based questions. If you can afford to, invest the time in the right people and close any skills gaps they may have.”
- Keep the cash flow going
Once you take on your first employee, paying their salary as agreed is non-negotiable. Aaron Dicks co-founded his business in 2012. He says: “Two years later and we had a number of website design and development retainers, and were getting to the point where we felt we would really benefit from having a third member on board. Luckily we had good accounting practises in place, so we could see exactly where our money was coming in and going out every month – allowing us to take into account another person’s wages without too much worry.”
Says Alex Bergh: “In terms of cash flow, going forward I have to be mindful that there are salaries to be paid at the end of the month so you have to give a little more consideration to ensuring invoices are paid on time whilst retaining what is needed to pay staff. I tend to make sure that happens by ring-fencing what I know will be going out as early on as possible.
“It feels like the business has evolved into something serious – in the early days if I couldn’t pay myself dead on time, it was no problem to hold off doing so knowing that we were due a payment imminently. I don’t have the luxury anymore as staff need to be paid on time each month.
- Get the right advice
Taking on an employee opens up a new set of challenges and obligations, so Neil Parker made sure he had help at hand: “Becoming an employer was a bit of a minefield, but my accountant and business bank helped with aspects like setting up payroll and writing contracts. It’s really important to get expert help and do everything by the book.”
- Deal with mistakes quickly
Our last tip comes from James Kinsella, and addresses the important issue of what to do if your new recruit isn’t working out: “If the person you bring in doesn’t perform as you expect make sure you act quickly. Book in regular meetings, let them know where you feel they could improve and define written action plans. This gives people the opportunity to change their behaviour and, in most cases, will resolve any issues. If not, then you will have given the person every opportunity before parting ways.”
Thanks to all our contributors for some great advice. Have you got any extra pointers to share or do you have any questions we haven’t answered? Tell us in the comments below!