Hiring your first employee is a big step in the life of a business. As an entrepreneur, you’ve invested time and money, taken large risks, and sacrificed a lot. Preparing to hire your first employee requires proper planning and will take you into uncharted territory. But hey, that’s the life of an entrepreneur! We learn something new every week.
I hope this guide will help you plan and execute the hiring of your first employee.
Making Our First Hire
We founded our marketing agency in 2008, and for the first three years we both worked full-time jobs while we grew our agency on the evenings and weekends. In 2011, my business partner and I were able to quit our jobs, and over the next year, we performed every task of the business – creative, account management, marketing, finance, janitor, and more. It took nearly three years for us to grow the business to a point of supporting two people full-time.
We had professional experience in a very small percentage of the weekly tasks we completed. We were becoming pros at on the job training.
A few months after going full-time, we hired two part-time people. This was a great first step for us; we were able to vary their hours based on the work for the week and it taught us how to build a production schedule, delegate work, and train and manage people. Shortly after hiring them, we extended our first full-time offer.
At that point, we committed to pay someone else before we paid ourselves. And it was terrifying.
How do we forecast future work for the position? What if we don’t have enough work? What if we lose an account and can’t afford her salary? What if we can’t afford to pay ourselves?
These were all valid questions, and they motivated us to get things right.
A 10 Step Process for Hiring Your First Employee
As our agency has grown from 0 employees to 25 employees, I’ve learned a lot, and I have compiled some tips to help you prepare to make your first hire.
Hiring Step #1: Estimate Future Work
In the early days, we had a mantra: hire when it hurts. Since the two of us had held every role within the company, we would only hire when we were completely maxed out and could no longer do all the work: we were so busy, it hurt. That was our only real option as a scrappy startup, and I now realize it was reactive hiring. Reactive hiring is less risky, but it also stalls growth.
As we’ve grown, we’ve created systems to predict future needs and spot bottlenecks, and that has allowed us to hire proactively.
Early on, we worked off an Excel sheet that listed all our current projects and future opportunities and we used this to estimate our workload.
I highly recommend you invest in two software platforms to help you predict future work: Teamwork for project management and Hubspot for your CRM and deal tracking.
Regardless of your system, make sure you estimate your future work before deciding to hire your first employee. You need to make sure they have something to do!
Hiring Step #2: Create a Hiring Budget
If you are fortunate enough to have a CPA at this point, they are an excellent resource for creating a hiring budget. If you don’t (we didn’t either), you will need to do your research. There are several great tools out there to help you determine the salary for the position based on the skill you are hiring for and adjusted to your market. You’ll want to add in the payroll taxes, which vary by state, but are usually around 10% of the salary.
As you build your budget, make sure you include onboarding fees. This can include a desk, computer, software, phone, and anything else that’ll be required for them to do their job. Depending on the industry, this could also include expensive pieces of equipment or even vehicles.
You will want to calculate the one-time and monthly onboarding expenses, and I encourage you to document this.
When you hire your first employee, you will be required to purchase items that you didn’t need when you were only paying yourself, such as a payroll software or a contract.
Here are some potential expenses to consider:
One Time Onboarding Expenses
- Hiring budget for job sites
- Desk
- Computer
- Phone
- Software
- Equipment
- Vehicle
Ongoing Monthly Expense
- Salary
- Payroll taxes
- Benefits
- Software licenses
Eventually, you will need to consider the physical space of your office. Unless you are a 100% remote company, you will need to factor in office expenses (rent, utilities, and maintenance). If you are a solo entrepreneur making your first in-house hire, you may be moving from your home office to an actual office, so be sure to factor this into your hiring expense.
This was our situation. We found a small office with month-to-month rent and no contract, at $800/month.
Hiring Step #3: Define the Position and Your Employee Benefits
As you prepare to hire your first employee, it’s likely they are taking over a portion of your current role. To find a great candidate, you need to define what they will be doing, and the more defined, the better.
Here are a few things to define, which will later help you create a job description.
- List of job responsibilities
- Work hours
- Work location (remote or in-house)
- Desired experience level
- Salary
- PTO allowances
- Paid holiday schedule
- Benefits, such as 401k, health, dental, vision, and life
When you are determining the preferred skill level, it’s important to consider who you can afford to hire. If you want someone with a lot of experience who can add insight from past positions and companies, and help you grow, it will cost you more. If your hiring budget is low and you are hiring an entry-level position, you will need to consider the extra time required to train and coach the new hire.
Hiring Step #4: Build your Company Profile
You have likely written a paragraph or two about your company for your website or social media profiles. But as you prepare to hire your first employee, it’s important to fully define who you are. This includes your “why” statement, mission and vision, and value propositions. You also need to define your growth goals and be able to paint a picture for the next year, three years, and ten years.
As you prepare to hire your first employee, you need to realize they are taking a chance on you. There may not be a clear picture of what employee success and growth looks like and your company is likely pretty young. You need to sell yourself to your potential hire, and they need to leave the interview with a feeling of confidence in the future direction of the company and their own potential for growth within the company.
Our first full-time hire is still with us today, 12 years later. She was hired as a Graphic Designer, promoted to Senior Graphic Designer, and now serves as our Creative Director and oversees the creative direction of our 25-team agency. We had to really sell ourselves in our interview with Heather. We were an unknown entity, and she was leaving an agency in Atlanta for a much smaller company.
You should know your story and where you are going, because most employees will ask those questions. And, depending on the current state of the job market, they may have multiple options.
Hiring Step #5: Build a Job Description
Every position should have a job description. It defines the role, guides your conversation during the interview, and provides accountability for the future employee. This document will be used to create the job post, to onboard the new employee, and to evaluate performance during quarterly and annual reviews. It is an important document for each position.
Here are some basic components to included in your job description:
- Job title
- Company profile (from step 4)
- Reporting structure
- Expectations
- Duties
- Compensation and benefits (from step 3)
There are a lot of great job description templates online, and there’s nothing wrong with starting with one of these, but make sure you revise it to be unique to your company and your specific needs.
Hiring Step #6: Complete the Paperwork
The final step before posting a position for your first hire is to make sure you are legally sound. I am not an attorney or a CPA, and I recommend you consult both before bringing on a new employee. Here are some of the items we finalized before hiring our first employee.
- Determine Payroll Management Company
- Gather state-required paperwork for new hires
- Consult an attorney and insurance agent on your company structure (this includes your company EIN, operating agreement, and workers comp insurance)
- Post workplace notices
- Crete non-compete or non-disclosure agreements (as necessary)
- Create an employee handbook
- Create a training plan
- Order your equipment (desks and computers can take 2-6 weeks to arrive)
Each item on this list requires some effort, but they will serve as foundational pieces for all future hires and necessary. A couple of these are living documents and will improve over time, especially your employee handbook and training plan.
Creating an Employee Handbook
You can find plenty of free employee handbook templates online and this will provide a great starting point. You’ll then add some of the company-specific information you compiled in step 3. You should require that employees sign this document and return it to your HR representative.
Some important topics to cover in an employee handbook are employment classifications, dress code, use of company property, substance abuse policy, harassment and discrimination policies, holiday and PTO schedule, workers comp, and separation from employment policy.
Creating a New Employee Training Plan
Your training plan should be well thought out and planned for ahead of time. This will help you structure the onboarding process, define what the new hire will need to be trained on, assess how long the onboarding process will take, and quantify the time it will take you to perform the training.
Our training plans include sessions about our company, our customers, our services, our processes and procedures, our internal software, and of course the job duties and responsibilities specific to the position we’ve hired for.
When creating an employee training plan, chart out the topic, trainer, date, and total hours required. It’s important to remember that there is a cost associated with hiring a new employee, and one aspect of the total cost is the time required from your other employees to complete the training.
Hiring Step #7: Post the Position
Getting the word out for your new position is a critical step, and there are multiple strategies. You can spend a lot of money on a headhunter, or you can spend next to nothing through your personal channels.
Before you start promoting the position, I would advise creating a Careers page on your website and post the detailed position there. This will serve as the central hub for all your hiring promotional efforts. Depending on the setup of your website, you can create a form to receive applications, or you can list an email address for all entries. Be sure to list what you’d like candidates to submit – resume, cover letter, examples of their work, references, etc.
Here’s a few places we’ve posted our job openings, each of which has generated qualified candidates:
- Company social media profiles
- Personal social media profiles
- Local Chamber of Commerce
- Job recruitment websites (Indeed, Monster, Zip Recruiter)
- Direct emails to friends, family, and colleagues with a link to the position
As you prepare to hire an employee, you will gain a lot of traction through leveraging your personal network. Don’t be afraid to ask others to share your job posting.
Hiring Step #8: Interview
Our interview process has drastically changed over the years. We’ve learned that most of our bad hires could have been avoided through a more thorough interview process, and we’ve tried to put in steps to help us make a great hiring decision.
Here are the two primary areas I would recommend you focus on:
- Interview questions
- Interview format
Interview Questions
Our interview questions focus on getting to know the person and the skillsets. We are trying to make sure they are a strong culture fit and align with our values, in addition to being highly capable of performing the tasks entrusted to them.
We ask about their hobbies, who they admire, how they handle challenges, and difficult decisions they’ve had to make in the past and how they made it. Then we get into the questions more specific to the actual duties of the job. In order to really know if someone aligns with your culture and team values, you have to know what your values are, which is why step four is important.
Interview Format
A few years in, we started adding a second round to our interviews. We reserve this for our top 1-2 candidates. During the second round, we pay candidates to work a day at the office. They are given actual client projects. It allows us to see their work and how long it takes them to complete it, gives them a chance to see what it’s like to work here, and we get to spend more time together over lunch.
Adding this to our interview process has greatly improved our success rate at hiring employees who have both the skillet and align with our company values.
Hiring Step #9: Onboard your New Employee
You’ve done all the hard work and you are ready to extend an offer! I recommend creating a formal offer letter that you submit to the candidate for signature. I will often call the candidate to extend the offer and let them know I’ll be following up via email with a formal offer.
After the letter has been signed and a start date has been agreed upon, you’ll be ready to start your onboarding, which will rely mostly on the information you compiled in step 6.
As you are defining the position, be sure to consider how your onboarding will differ for a remote employee versus an in-house employee. If you are hiring a remote employee, consider bringing them to your office for the first week and providing a hotel and meals for them. It’s important to meet your new employee in person and build a relationship from the beginning.
Hiring Step #10: Celebrate
Hiring your first employee is a major accomplishment in the life of your business, and it’s important to celebrate the accomplishment. This is a milestone that will always be a part of your entrepreneurial journey. As I mentioned, our first hire is still with us and has grown immensely, now serving as Creative Director and a member of our Executive team. She will forever be a monumental part of our story. Don’t forget to celebrate!
And celebrate with your employee. During your onboarding, do your best to make them feel welcome. Take them to coffee and lunch, prepare a welcome gift with some company swag, and make sure they feel prepared to do their role for your company. Starting a new job can sometimes feel like you’re drowning, and the better you prepare for their arrival, the more equipped they will be to do their role.
Leave a Reply