5 Things You Need to Know Before Hiring Your First Employee

To prevent costly mistakes and wasted time, run through all of the following considerations before you even think about recruiting.

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By Eric Siu


Opinions expressed by Entrepreneur contributors are their own.

Making the decision to expand your business is a big deal. Whether you're a single professional whose practice has outgrown your available time or an entrepreneur with dreams of growing the next Fortune 500 company, adding a new employee into the mix isn't a process that should be taken lightly.

To prevent costly mistakes and wasted time, run through all of the following considerations before you even think about hitting "Publish" on that job-board listing:

1. Check your finances.

Hiring employees involves more than just paying a salary. Depending on your state, you may be responsible for employment taxes, worker's compensation fees, additional insurance requirements and more. If you're feeling generous, your compensation package may include benefits, vacation/personal time and 401k contributions above and beyond your employee's salary.

Related: 6 Tips to Keep in Mind When Hiring Your First Employees

Given the potential financial commitment involved, it's imperative that you check your current financial situation and project your current income. You might be able to make payroll for the next month, but if you have any concerns about falling short in the next year, consider working with a contract agency or freelancer until your situation is more stable.

2. Assess your needs.

If you're confident that your finances support bringing on a new employee, the next big question you'll have to answer is what type of worker to hire. There are a few different ways to approach this question:

Ask where you need help: Think about where the biggest needs in your company exist and fill them with a new employee. In my case with Growth Everywhere, I was getting so busy with administrative tasks that I didn't have enough time available to focus on growth activities. The clear choice was to hire an administrative assistant who could free up my time for higher value activities.

Base it on your bottom line: Alternatively, you could look at hiring the person or position that's most likely to have an impact on your bottom line. If a high churn rate is killing your revenue, an account manager or customer-service representative could make a big difference. Or if your funnel is pretty well established, a good salesperson could help send as many leads to it as possible.

Compliment your skills: Say you're a great salesperson, but you lack the strategic knowledge on how to grow a business to the size you desire. If you're in this position, hiring a manager, business director or chief financial officer could help fill the gaps.

There's no clear-cut answer for every business, so put some thought into what your company needs now and what it will take to meet your growth goals before bringing on a new employee.

3. Look for candidates with startup experience.

You've listed your job and the resumes are flying in -- now how do you pick the candidate that's right for your business?

Related: How to Communicate With Your First Employee

There's a lot that goes into choosing the right person, and you'll want to look at everything from stated skills, personality to references when making your selection. But if I could offer you one piece of advice, it would be to look for people that have worked for startups before.

Working for a small company requires that employees work autonomously, and it rewards those who are able to wear many hats and work beyond their stated job descriptions. Candidates coming from large firms might look good on paper, but they're generally used to the structure, hierarchy and processes found at established businesses. That doesn't mean they won't work out, but the unique company culture of a growing business can make it a challenging adjustment.

4. Ask for recommendations.

Another great strategy for finding good employees is to ask around. Talk to your friends, your business contacts and anyone else you can think of that might be able to send a qualified candidate your way. Since recommending somebody who turns out to be a bad employee reflects poorly on your contacts, you'll find that these people are likely to only send you the candidates that they're truly willing to stand behind.

5. Cover your … business.

Finally, keep in mind that hiring an employee isn't as simple as offering somebody money and expecting them to do the work you describe. Depending on your state and your industry, there are a number of different laws and restrictions that govern the employee-employer relationship -- and you definitely don't want to find out about these when you're being taken to court for a mistake you've made!

Save yourself the time, money and legal headaches employee disputes can cause by consulting a lawyer from the start. Paying for a few hours of consultation and document review is a great way to invest in your small company's long-term growth.

What tips would you add? Share your hiring recommendations in the comments section below!

Related: 4 Secrets to Firing Your First Employee

Eric Siu

CEO, Single Grain. Founder, Growth Everywhere.

Eric Siu is the CEO of digital marketing agency Single Grain. Single Grain has worked with companies such as Amazon, Uber and Salesforce to help them acquire more customers. He also hosts two podcasts: Marketing School with Neil Patel and Growth Everywhere, an entrepreneurial podcast where he dissects growth levers that help businesses scale. 


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