As Your Business Grows, Who Should Your First Hire Be?

There are limits to being a one-man band. Many entrepreneurs start off performing all functions in the early stages of a startup. As the business grows, there will likely be a time when something will have to give. Even for the most talented and ambitious workaholic, there are only so many hours in a day. Additional human resource is needed to continue or push the momentum. When this point is reached, there are multiple questions that need to be answered to make the best decision for the business.

Perhaps the easiest of the questions are related. What does the business need most to move forward? Is it marketing and sales? Fulfillment? Business management? How do your personal strengths and weaknesses fit into the needs? Maybe the company needs marketing and sales, which is a personal strength, but other time demands are getting in your way of being able to focus on this. Or, your weakness could be the sales and marketing, and that is the highest need. Either way, it is time to hire support.

Once you are clear on the function the new hire will serve, you need to determine the level of support you need? There are 3 levels of support to consider.

Freelance/Contract Support

In the early stages of a startup, flexibility is often king – flexibility in number of hours needed, length of project, and focus of project. Demand is uncertain; and needs change. Web design and photography are typical services that would fall under this level of support. A contractor or freelancer will be the most flexible and (most likely) economical at this stage. Although these terms are often used interchangeable, freelancers are self-employed and typically use their own materials and space to provide a specific service in their area of expertise. A contractor may be self-employed or work for an organization, and he or she provides project-based service which may be at the business location. While freelance and contract support may cost more per hour than an employee wage, you pay only for what you need, which in the early stages of a business will vary. You can easily slim down, cut back, or change the service needed.

You would be wise to also take the time to use a written contract to avoid costly misunderstandings in hiring this support. At a minimum, the contract should define the project details and scope, payment terms, deadlines, expenses (e.g., mileage, supplies), and final copyrights. Don’t forget the signatures.

Hiring First Employee

When your support needs demand it, and the financing supports it, do not be afraid to make your first hire. There are advantages of hiring an employee, including the long-term investment opportunity to build the employee’s knowledge and skills, tapping new network connections and building leadership that could be advantageous to the business for years to come. However, there are many legal obligations and expenses that come with this decision. One cost estimate for recruiting, hiring and training a new hire is $4000. The following links are two excellent online resources to guide this decision and execution:

Taking on a Partner

The level of support your business needs may be the level of a partner. A partner whose strengths offset your weaknesses can be game changer for a startup. Obviously this level of support requires the most intense level of consideration. There are many legal and financial ramifications to a business partnership. Do not underestimate them. If this is your path, seek good counsel and get your legal ducks in a row. There are many inexpensive and easy online templates for these partnerships. Avoid them! Investing time and finances upfront with appropriate legal support will save you time and money later, and could make or break your business.

As a guide to seeking that business partner, be crystal clear about what you need from a partner. You need to know the partner’s financial situation, role expectations, level of commitment, life circumstances that could affect commitment or performance. Then, find an attorney with this business expertise.

There are many considerations, costs and legal factors that are part of any start-up. Securing competent, needed help can be a huge boost for a small business. Do not fear this step, but tread carefully and purposefully.