How to hire your first employee and scale your small business

Hiring your first employee is a crucial step for any small business owner, so you need to be sure you get everything right. It also comes with a number of legal and practical considerations, which we’ll explore in this article. 

Your first employee will play an important role in shaping not just your company’s future success, but also its culture and values. So, you must be sure you’re able to make the right hiring decision from the first try; after all, a small business has  very little leeway for error and making the wrong hire can be very costly.

But how exactly do you define the role and job responsibilities of your first employee? How can you decide what skills you should look for? And how can you assess them objectively and without bias?

In this article, we’ll talk about all this – and more. Here, you’ll find out all you need to know about: 

• When to hire your first employee

• What your hiring process should look like

• How to decide which skills are the most important ones

• How to evaluate and compare candidates

• What costs hiring an employee entails (besides salary)

When should you hire your first employee?

If you’ve been managing your business on your own for a while, you’re probably used to taking on all kinds of responsibilities and roles – but, let’s face it, you cannot be an expert in everything. At some point, you’ll need to start delegating some of your work to someone else in order to: 

• Scale your business without limiting yourself to only what you’re capable of doing

• Avoid overworking yourself and burning out

• Get expert help on specific tasks

• Free up enough time and energy to start thinking about growth

And while hiring a freelancer can help with all that temporarily, at some point you’ll probably need to find a person who’s truly invested in the success of your business and who can be available to work with you full time. 

But how do you know it’s time to actually hire someone? 

Here are some of the clear signs that your business will benefit from hiring your first employee: 

1. You have a clear idea of how to grow your business but you simply don’t have the capacity to explore the different growth opportunities you’re seeing

2. You’re starting to turn down projects that would otherwise be a great fit

3. You’re no longer able to provide the same customer service as before – and your customers are starting to notice

4. You’re falling behind on admin work or bookkeeping and are constantly feeling stressed about it

5. Your business’ financial situation is stable and you know where your revenue in the next quarters will be coming from and what fluctuations you might expect

6. You could use the help of a person who has a specific skill set that’s different from yours

7. You notice the rate of your business’ growth is stagnating, but not because market demand is shrinking

If you have started to notice any of the above signs, it might be time to start thinking about hiring your first employee, or at the very least, an independent contractor. This will enable you to focus on the tasks you’re truly passionate about and that move the needle. 

Things to consider before hiring your first employee

There are a few considerations you need to make before you start the hiring process. 

• Needs and requirements: What tasks do you need help with and do they fit within a single role? To make a successful hire, you need to know what exactly they’ll do – and not just expect one person to do your bookkeeping, manage your social media accounts, and take care of customer support.

• Culture and values: When you’re operating as a one-man army, you live and breathe your business’ culture – so you probably haven’t given much thought about it or felt the need to define it. Before you make your first hire, however, you need to describe your culture and values to make sure you attract the right talent.

• Budget: Are you able to afford to hire an employee, and if yes, what’s the budget you can allocate to this first hire? Your business should generate enough revenue to cover the new person’s salary, benefits, taxes, and other associated costs, while still being profitable.

• Type of contract: Do you need someone to work with you full-time, or would you rather hire a part-time employee in the beginning? Would hiring a freelancer make sense or do you need someone who’s fully invested in your business? 

How to hire your first employee: A step-by-step guide

Hiring your first employee probably feels like a daunting task at the moment – but with the right process and talent assessment tools, you can make it much simpler. Below, you’ll find our step-by-step guide to making your first hire: 

1. Define the role, salary, and benefits 

Although your first employee might sometimes need to wear a few different hats, it’s still essential to clearly define the role before you start the hiring process. This will give you clarity and is also instrumental in attracting the right talent. 

Write a detailed job description, in which you describe your first employee’s future high-level responsibilities and day-to-day tasks. Make sure you’re realistic with your requirements and aren’t trying to fit the tasks of three distinct roles into one: There’s only so much a single person can do.

Next, look at your budget and average salaries for this role in your area. Define the salary based on that and consider benefits such as health insurance, retirement plans, and time off. 

2. Take care of the legal aspects of hiring an employee

Next, you must take care of the legal requirements for hiring an employee. There are a few steps you need to take, such as to: 

• Get a federal Employee Identification Number (EIN)

• Register with your state’s unemployment insurance agency

• Make sure you know how to check employees’ work eligibility 

• Get workers’ compensation insurance, and more

These vary from state to state, so make sure you check the rules that apply to your area.

3. Post a job ad and let your network know you’re hiring

Now, you need to let the world know that you’re hiring. Post an ad on job boards such as LinkedIn, Monster, and Indeed, and don’t forget to ask your professional network for referrals, too. 

4. Evaluate skills with the help of a skills assessment

By now, you’ll have received a number of applications. Skills assessments are the best way to evaluate your candidates’ skills fairly and objectively, without letting unconscious biases seep into your selection process. 

With TestGorilla, you can build an assessment of up to five skills tests and ask all candidates to take it. This way, you’ll be able to evaluate their expertise, knowledge, and soft skills quickly and identify your best talent.

5. Interview the best applicants

Once you’ve identified your most skilled candidates, it’s time to invite them to an interview to gain a deeper understanding of their experience and the value they can bring to the table. 

For this phase of the hiring process, it’s best to use structured interviews (just like Google does), where you ask everyone the same questions in the same order. This enables you to focus on each person’s skills and compare answers rather than rely on your personal preferences or gut feelings. 

6. Pick the right person for the role and extend an offer

By now, you’ll have plenty of information about each one of your top candidates, enabling you to make the right hiring decision. 

Extend an offer to the one who best fits your needs and discuss all the details, such as the salary, start date, work hours, benefits, and more.

7. Set up payroll and take care of the admin work

Once you make a hire, you need to: 

• Set up your payroll 

• Report the employment to your state registry

• Make sure you’re maintaining accurate employee records

Employee records include details such as your employee’s full name, mailing address, start date, working hours and hours worked each week, earnings, payment dates, and more. 

Hard skills you need to look for in your first employee

The hard skills will depend on your industry and the specific role of your first employee.

Here are some examples of hard skills to look for, based on the role for which you’ll be hiring: 

• Administrative assistant: If you’re hiring an admin assistant, they need to have excellent schedule management and email management skills and be proficient in Microsoft Windows and Microsoft Office Suite

• Customer service representative: Customer support skills are essential for your first customer service representative should have; customer relationship management (CRM) software, such as HubSpot CRM or Salesforce CRM could be nice to have

• Salesperson: Look for a salesperson who knows the ins and outs of CRM software and has a solid understanding of different sales frameworks; depending on your industry, you’d need to assess B2C or B2B sales skills, too

• Marketing expert: Marketing analytics, product marketing management, email marketing, PPC advertising are all essential for a well-rounded marketing professional

• Graphic designer: Look for a person who’s proficient in graphic design software, such as Adobe Photoshop or Adobe Illustrator; if you need them to help you build your website, look for someone who has a solid understanding of UX/UI design and frontend web development

Your first employee’s soft skills

The success of your business will depend on your first employee’s ability to build strategic business relationships and manage their own workload and time efficiently. They also need to be excellent problem solvers and know how to make the most out of every situation with sometimes limited resources and time.

Here are some of the most essential soft skills you should look for: 

Communication

Your first employee needs to be an excellent communicator to build long-standing relationships with your clients and partners. 

They need to know how to adapt their communication style to different people and situations, read non-verbal cues, use professional business etiquette, express themselves clearly and effectively to get their point across, and listen attentively to what others have to say.

Time management 

In a small business effective time management is a must – there’s always a lot to do and everything seems urgent, so you need someone who knows how to prioritize their responsibilities, manage their schedule well, and make accurate estimates of the time each task should take.

Business judgment

Regardless of the specific role for which you hire them, your first employee needs to have a strong intuition for growth opportunities and know how to take advantage of each situation to the benefit of your company. They also need to know how to evaluate risk and take appropriate measures to shield your business from it.

Problem solving

Small businesses often have limited resources to deal with different challenges, so the person you hire needs to be an excellent problem solver and a fast thinker. Look for someone who’s proactive and who isn’t afraid to try out new approaches to address roadblocks. 

How to test your first employee’s skills

The best way to evaluate your applicants’ skills is to use an objective and impartial skills assessment process. Pre-employment skills testing is ideal for that, because it enables you to evaluate everyone’s abilities and knowledge quickly and accurately without any bias: 

• Everyone takes the same tests and has a fair chance to show their skills

• The platform grades tests automatically, leaving no place for interpretation or personal preferences

• You’re able to compare candidates based on hard data rather than on information from their resumes

TestGorilla offers 300+ skills tests that you can use to evaluate any skill, ranging from cognitive abilities to role-specific technical knowledge and anything in between. You can combine up to five skills tests in one skills assessment for a well-rounded evaluation of all candidates. 

Here are some examples of combinations of tests you can use for different roles: 

• Administrative assistant: Time management, communication, email management, Microsoft Excel skills test, administrative assistant skills

• Customer service representative: Communication, Zendesk CS, Hubspot CRM

• Salesperson: B2C or B2B sales, communication, negotiation, culture add

• Marketing expert: Marketing analytics, SEO outreach, email marketing, PPC advertising, culture add

• Graphic designer: Adobe Photoshop, Adobe Illustrator, UX/UI design, communication, time management

For more skills tests, head on to our test library. 

Where to find your first employee

There are a few ways you can use to source talent when hiring your first employee: 

• Use job platforms: Post a job ad on platforms like LinkedIn, Monster, Indeed, or Glassdoor

• Reach out to passive candidates: You can also use LinkedIn’s search function to find qualified candidates in your area and reach out to them directly

• Use your network: Let your professional and personal network know that you’re looking to make your first hire; referrals are an excellent way to find skilled people eager to take on a new challenge

• Go to industry-specific events: Go to local networking events such as conferences or workshops to connect with experts in your field who might be interested in helping you grow your business

The costs of hiring an employee

The salary you pay will depend on the role, the skills you need your first employee to have, your industry, and the cost of living in your area, if you’re hiring locally. 

That being said, your employee’s salary is not the only cost you need to consider. You also need to factor in the costs of: 

• Employment taxes

• The employee’s benefits

• Job ad fees

• Recruitment costs and paperwork

• Payroll management costs

• Onboarding and training costs

Make sure you calculate everything carefully before you begin your recruitment process. 

Use a skills-first approach to hiring and build a successful business

One of the best ways to build a successful, scalable business is to use a skills-first approach to hiring – and to implement this strategy right from the start, when you’re hiring your very first employee. 

This enables you to find and attract the best talent and make each hiring decision with confidence and ease.

Use TestGorilla to hire your first employee without guesswork and unconscious biases. Sign up for a  free demo or try out our free plan today.