Starting a business is no doubt one of the hardest, yet most rewarding things you’ll ever do. You could work years by yourself before you reach the point where you’re finally big enough to bring on additional staff. Or, you could work just a few months. It really depends on your niche, how much time and effort you’re pouring into growing the business, how much you need to scale – and how quickly you need to do it.
The decision to expand operations to include another worker isn’t an easy one. There’s a lot of pressure and it’s a risk, but honestly, as far as business problems go, this is a good one to have. You’re doing so well you need help to get it all done! Here’s some advice to help make sure you’re really ready to take the plunge – and then what to do once you jump over that ledge.
Are You Really Ready to Make Your First Hire?
At this point, you’re moving from being responsible for your own well-being, to at least being responsible for part of someone else’s. Nothing says you have to hire full-time, but regardless of status, you are still entrusting part of your business to someone else. You’re trusting that they’ll show up on time and get the work done. And if they don’t, you’ll have to deal with the fall out with your clients … and pick up the slack.
What Status Are You Considering?
Let’s take a second to discuss the differences between a freelancer and an employee. A freelancer is considered an independent contractor. There are some important things to consider when it comes to the worker classification, because if you hire an independent contractor, and treat them like an employee, you could be up against a law suit.
According to the Small Business Administration (SBA), an employee: performs duties others dictate or control, works for a single employer, and is trained for the work to be done. An independent contractor on the other hand: has his/her own business tools, sets his own hours, has his/her own employees, operates under a business name, has more than one client, invoices for the work they’ve completed, advertises their business services, and keeps their own business records.
For many small businesses, it makes sense to hire independent contractors, because of the savings in labor costs, reduced liability, and the flexibility in hiring and firing. But, if you’re requiring the contractor to stop working for everyone else, work within hours you set, and perform duties only you dictate, you’ve likely got an employee on your hands. There’s no single test to determine the right classification, but you can ask the IRS to help you make sure the hire is classified correctly with Form SS-8: Determination of a Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
If you opt for to hire an employee, there are certain required benefits:
- Social Security Taxes
- Unemployment Insurance – may or may not be required based on the nature of your business
- Workers Compensation
- Disability Insurance – only required in California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island
- Leave Benefits – the majority are not required on a federal level, but you must allow employees to have up to 12 weeks of job-protected, unpaid leave during any 12-month period for birth and care of a child (including adoption and foster care placement), the care of an immediate family member who has a serious healthy condition, or care of the employee’s own serious health condition, under the Family and Medical Leave Act (FMLA)
Virtual or In-House?
Depending on the nature of your business and the tasks you need help with, you may need to ask someone to come in-house, which means having office expenses – and leaning more toward employee than independent contractor.
If the worker can work from home, or from anywhere they want as long as there is an internet connection, then you save on office expenses, and are leaning more toward freelance status.
The Hiring Process
Start Advertising Your Open Position
Make it known you’re looking for help. You don’t have to pay a lot of money to advertise on the major job websites to get the word out. Start with a post on your blog. Share it on social media. Tell your friends and family. Reach out to any people you’ve got in your network who may know someone who is interested.
To cut down on the back and forth, and answering a lot of the same questions over and over, focus on creating a clear, concise job ad. Say what the position will be, what the responsibilities will be, experience required, what the time expectations will be, and provide a possible salary range.
For instance, something like this doesn’t give away too much information, but is enough to spark interest.
Startup company looking for a virtual assistant with experience in social media, email marketing, and data entry. Responsibilities include managing social media calendar, writing and scheduling email newsletters, and responding to general email. This position requires at least one year of experience working in a similar position, and will take 10 to 20 hours a week. Pay is dependent on experience, but ranges from $X to $X a week, paid by PayPal. Candidate may work from home, but should be reachable via Skype during work hours.
It’s short and sweet but provides enough detail to stop fielding questions about pay and frequency. And if you have people asking you about how much the job pays, you can tell they didn’t pay attention to the job ad and move onto other applicants.
If you can’t locate a decent pool of candidates from your network, post the ad on Craigslist, Indeed, FlexJobs, and WiseStep.
It’s up to you to decide how long to run the ad. You may get an overwhelming response the first day and decide you do not need any more applicants to connect with. You’ll have a lot of email to sort through, so sift through them all and reach out to the ones you’re most interested in to schedule a time to talk.
Interview Your Candidates
Depending on the nature of the job, you may not really need a formal job interview. For example, if you’re hiring a freelance writer, you can gauge how well they’ll be able to work for you by asking for samples of their work. If you’re willing to take a shot on a brand new writer, give them a prompt and ask them to write something for you. (You’ll get a better response if you offer to pay them for the test piece.) Most seasoned writers will have articles online they can send you links to, so you can read them and decide if you want to hire them.
If you can’t decide who to hire with a process like that, schedule 15 to 30 minute blocks of time on Skype or phone to discuss the job in more detail, and find out more about the applicant. Then, after you’ve gone through everyone, decide who you’re going to bring on board.
From there, assuming you’ve chosen to hire a contractor: send them a contract, non-disclosure agreement (NDA), if you need to use it, and a W-9 form, if you’re not paying via PayPal or credit card. This form is a request for their tax payer identification number so you can file a 1099-MISC at the end of the year if you pay them more than $600. If you pay your contractor through PayPal or credit card, there is no need to collect this information, as you will not be responsible for sending a 1099 – PayPal and other third-party payment processors will send their own, a 1099-K.
Scale Up as Needed
Once you have the new worker hired, train them accordingly. Then, as your business continues to grow and you need to bring on more help, you can repeat the process with a second, third, or fourth worker. Be aware that as you scale up, you may need to invest in other tools like project management and time tracking to keep the workflow running as smoothly and efficiently as possible.
Be Ready When the Team Member Moves On
Whether your first hire works out fabulously for your business or not, you cannot expect the person you hire to work there forever. If you’re doing your job, helping them grow and develop as a member of your team, they will gain new skills. As they develop their own abilities, it’s possible you’ll no longer be able to keep them learning, or keep them busy. They may decide they’re ready for more challenges (and more money). It’s the natural course of things, so rather than being upset about it, be happy that you’ve helped them reach that point of success in their journey. They after all, have played a role in yours, too!
You’ll need to start the hiring process again to replace them, so thank them in advance if they provide a notice. However, note that a notice is not required from a contractor, and even though it’s etiquette for an employee, you may not get one.
Worst case scenario, you go through a period of growing pains like you did when you were on your own before you hired your team member, until you can hire and train a replacement.