Growing your small business? Here’s how you know when you’re ready for your first hire

Growing your small business? Here’s how you know when you’re ready for your first hire

Ed Palmer

Ed Palmer
4th September 2019

Your business is booming.

You’ve had a great couple of months, you’re approaching capacity, and you’ve got a solid base of loyal clients feeding you a steady, reliable income.

It’s only natural to think that means you’re ready to expand.

But here’s the reality:

Becoming an employer is complicated. It’s a huge commitment, and you need to be sure that your business is really ready for it.

Because if you jump into employment too soon, you’re risking more than just your own income – and your hasty decisions now affect someone else.

You won’t need every single one of these signposts to know you’re ready for your first employee. But you will need most of them before you can say with certainty that it’s time to make a change.

Here are ten of the most common clues that mean your business is ready to start hiring:

1. You’re turning down new work and new clients

Ironically, this is probably the first major goal for any freelancer or sole trader: to have so much new work and so many new clients streaming in that you’re spoilt for choice.

But when demand outstrips supply, you’re missing out on easy revenue. And if you find that you’re turning down projects or new clients on a regular basis for an extended time (at least a few months), that probably means you’re ready to grow your business and hire some extra help.

2. Your forecasts look promising (well into the future)

Before you can be sure that you can sustain an employee, you need to be confident that you’ll have enough work – and enough money coming in – to make it worthwhile.

So don’t be fooled by a seasonal bump in activity, or a single fixed-term project that’s especially demanding.

Take a good look at your current clients and their growth, your business’s targets and milestones for the year ahead, and the pipeline of promising new leads you have – and only then decide if you can comfortably take on the commitment of a permanent worker.

3. You’re overworked

This should be an easy one to recognise.

If you’re pulling 60-hour weeks more often than you’d like – and especially if you’re starting to notice a drop in the quality of the work you do or the service you give your clients – it’s probably time to start thinking about some extra help.

But watch out:

Working long hours doesn’t always mean you’re generating extra income. Inefficient methods or unnecessary tasks take up time, so always make sure the things you’re hiring an employee to do are tasks that actually make money.

4. You’re spending too much time on lengthy details

As a solo business owner, you probably pride yourself on your wide range of skills and your ability to fit into all sorts of roles.

But some tasks are just too time-consuming for one person. If you try to handle everything alone, you’ll spread yourself too thin – and you won’t have time to focus on the big-picture stuff.

Things like SEO, content marketing, social media, and accounting can easily take up more than half of your working week. And since they’re not activities that require the specialised attention of the business owner, that means they can easily be passed onto someone else with a little bit of training and onboarding.

Unfortunately, they’re also not activities which have an immediate impact on your revenue. So unless you’re confident that your budget can handle a new hire, these tasks alone won’t always be a good enough reason to expand.

5. You need new skills that take too long to learn

As your business grows, you’ll start to see promising new services and areas of work that can help you diversify and offer more to your clients.

And if those things include skills that require hefty experience – like web development or graphic design – you won’t have any hope of learning those new skills to a high enough standard in time.

So if your business needs more than what you’ve got to keep its clients happy and make more money, that’s usually a sign that you need to start looking for someone new.

6. You’re already using contractors or freelancers

If you’re a cautious business owner, you’ll probably want to (or have to!) test the water with a few freelancers before you fully commit to a permanent employee.

It’s a great way to get used to working with other people on a short-term or infrequent basis – and it’s also a great way to practise your project management and people management skills.

But when you look at the per-hour or per-project costs, freelancers aren’t cheap. And if you start using them frequently, there’ll quickly come a point where the total cost of using a freelancer starts to compare to the cost of a permanent employee.

If your business is spending £2,000 a month (every month) on a freelancer that’s only doing part-time projects, you could use that exact same budget on a £2,000-per-month employee.

If you’re going to have the same costs either way, why not choose someone who you can invest in and rely on as you grow and expand your business in the future?

7. Your customers are complaining

When you’re always scrambling for new work and new clients to keep things ticking over, repeat business is a gold mine.

So if your regular customers have something to say about the quality and speed of your work (or the level of attention they’re getting from you), you really need to listen.

In a perfect world, you’d be able to keep every client perfectly happy right up to the point where you’re working at full capacity.

But we don’t live in a perfect world.

For the most part, your regular clients are probably patient people, and they understand the difficulties you face when you’re working alone.

So if you start to hear a trickle of complaints (even small and polite ones), that means things are really going downhill – and it’s probably time to get some help to bring your service back to where it should be.

8. Your clients are growing and expanding

If you’re lucky enough to have successful clients – or your work is so good that it’s helping your clients see success – there’ll come a time when they need more from you.

They might need a higher volume of the same work or a completely new area of expertise.

Either way, you don’t want your business to start holding them back. And you really don’t want them to start looking elsewhere for someone else who can help them meet their demands.

So if you want to keep your best clients as they grow and expand, you need to be able to keep them happy as they continue to see bigger and bigger success. Because if you have a strong, ongoing relationship, they’ll want to take you with them – their success becomes your success.

9. You’ve already done your research

Making the move from a sole trader or freelancer to a business with employees isn’t something to be taken lightly (even if it’s just one employee).

You’ll have new responsibilities – both legal and ethical – and you’ll need to be able to provide everything that a normal employer would usually provide.

At the very least, you’ll need to have a basic idea of things like:

  • Registering as an employer with HMRC
  • Employers’ liability insurance
  • Employment contracts
  • Automatic pension enrolment
  • And some of the often-forgotten basics, such as health and safety laws, rights to work in the UK, and any legally required background checks on your employees.

For any first-time employer, there’s a lot to take in. So the best way to start is by taking a look at some of the useful information over at the Employment section of the UK Government website.

10. You’ve got the following things in place (or you’re close)

Knowledge and research are crucial. But there are plenty of things you’ll need to have ready before you take on an employee – and it can take time to get these things set up and work out the kinks.

So long before you start looking for your first new hire, you should have:

  • A surplus of funds (or a long backlog of secured work) to ensure you can reliably pay a salary
  • A well-defined role for the new employee’s position – not just so they can perform well, but also to help guide your job adverts and interviews
  • A solid onboarding and training process – to help you get your new employee ready to work as quickly as possible
  • The systems you’ll need to manage your employee – things like payroll, logging hours, allocating holidays, etc.

Are you really ready for a permanent expansion?

There’s a lot to take in when it comes to employment. It’s a committed change to the structure of your business – and it’s not just your own livelihood on the line any more.

So make sure you’re ready. And be sure that it makes good financial sense.

Because once you commit to hiring an employee, it’s going to be an awful situation if you have to let them go because your business wasn’t in the right place.