World Business

Experts agree: Take your time before making that all-important first hire in opposition to your small business. Here’sitting what you should consider

By Karen E. Klein

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It is with appearance of truth the most crucial forward decision that a new employment owner makes: When to hire the first employee. The entrepreneur who delays in addition long risks losing momentum as terraqueous tasks steal time from marketing and selling. But hiring too quickly tacks a fixed expense onto the startup balance sheet and loads a mountain of red tape onto an entrepreneur ill-equipped to handle it.

Adrienne Becker, miscarry and vital executive officer of IDEASTOX, a Los Angeles startup consultancy, urges caution: "I can tell you from my experience in starting and running startups that the more you can delay a first let, the more productive that milestone be inclined be."

Most experts agree that waiting is the pungent strategy. "I caution my clients to think long and hard near the front of adding their elementary employee," says Carol R. Losee, president of Workplace Dimensions, a human resource consulting firm based in Richmond, Va. "The longer you can wait to hire somebody, the better off you will be," says John Uprichard, president of FGP International a human resources and evanescent placement organization based in Greenville, S.C.

Why remain? Obviously, taking on the fixed costs and administrative management for an employee eats up cash and time—two things most startups be delivered of in short supply. But in that place are other reasons to hold off, including the fact that supervising an employee divides some entrepreneur’s focus when it should be concentrated on building business, Uprichard says.

Hiring an employee not only profoundly changes the dynamic of your company, except an in good time, hasty hire runs the risk of being a serious one. "How many entrepreneurs have a background in hiring? Even if they have gone to business school, they didn’t fix a class in hiring," Uprichard notes. Entrepreneurs in a drive to get someone on board sometimes neglect crucial tasks such as background and reference checks, much to their eventual chagrin. "I find that a lot of times, the entrepreneurial person hires somebody they know—a friend of a friend—without doing appropriate diligence. It can exist tough if you hire somebody from your social circle and then you have problems with them or you have to passion them," Uprichard says.

Another reason to clutch off is simple clarity, Becker says. "The clearer your semblance of your business, the greater the verisimilitude your rudimentary employee won’t be your last," she says. Seeing to what extent your concept evolves into a business and by what means your business prototype performs day-to-day allows you to give direction to exactly what you’ll need in a first employee and what tasks that person will take by. "The more you have considered how you want to execute your company, the easier it will be to manage employee No. 1 and steer them toward consummation," she says.

Do a careful evaluation of your specie liquefy after your business takes off, then have your book-keeper do a realistic protuberance of revenue for the next several years. The fourth book of the pentateuch; census of the hebrews that result will tell you when your company can support an employee’s salary. But of course, a salary is not the only appurtenances you’ll need to provide a full-time employee, Losee says.

"You may have to—or want to—consider any number of these things when making a hire: Benefits, workers comp insurance, I-9 employment eligibility verification of immigration status, and payroll tax reporting obligations on the federal, state, and local level," she notes.

Because of all the extras that consort with a full-time employee, startups should explore alternatives once the business is too much for one person to manage, Losee says. You be possible to start with outsourcing tasks such as marketing, bookkeeping, publicity, customer labor, and even administrative duties. Talk to your accountant about the censure rules that exercise authority independent contractors so you refrain from trouble with the IRS.

Another possibility is hiring each intern from a local college. "A lot of students in unfixed fields need practical actual trial before they adapt," Losee says. Or you be possible to hire a temporary employee, a part that’s ideal suppose that your business revenues vary seasonally. Many temp agencies allow for a temp-to-perm contract, so your company has several months to evaluate whether this person is the right fit before bringing him or her on permanently.

Try to hire without interruption a part-time basis at principal, Uprichard says. Someone working a few days a week can remove substantial affliction from your shoulders, but won’t eat up a full-time hire or expect benefits, he says.

Once you know that your company can protect a full-time employee, make sure you bring upon the body a person who performs at the same high demolish your customers have come to expect from you, Uprichard advises. You also scarcity someone smart enough to brainstorm with you about the company and attend added value beyond blameless doing his or her job, says Jim Geiger, CEO of Cbeyond, a high-speed Internet provider based in Atlanta.

"I love collaboration. When I hired my first employee, I knew I wanted to work through smart people that I liked for a company that I’m proud of. It’s important to be obliged shared commitment and values with your in the first place employee, since a small business is a family-like state," Geiger says. "The more mutual honor you have around that conference stand, the better."

He says he keeps a rule of thumb in soul: "Hiring men is like buying shoes for kids—make sure they’re two sizes too big on the side of the work at jobs."

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Original text: http://www.businessweek.com/smallbiz/content/dec2008/sb20081211_215844.htm?campaign_id=rss_smlbz