THE RIGHT TIME TO HIRE
Is your business so hectic that you can’t accept new orders or new clients? Or do you even have time to deliver what you’ve already promised?
Should you expand the business but you just don’t have the time or energy?
Do you just hate doing some parts of the business accounting maybe?
Is it time for some work-life balance?
If you answered yes to any of these questions then it’s probably the right time to get some help; to bring someone new into the business. This is a really important step both for you and for your business, so we suggest you have a plan. Here are some things to think about.
WHO SHOULD YOU HIRE?
1. Write a job description. It will help you look for that right person. Include the following information:
(i) Specific work that needs to be done;
(ii) Skills and the experience that someone needs to do the work; and
(iii) Values of your business.
The description makes it clearer as to how someone will help you and it helps you find someone who will fit into your business.
2. Think about how much work this person needs to do and how long it will take them to do that work. Do you need full-time help or will part-time help be enough? Having a part-time person may be a good place to start.
3. Decide if the type of work requires an expert? Experts often work for themselves as independent contractors. Independent contractors can be less of a commitment, so there’s less risk and more flexibility for you.
4. Set up a formal process for people to submit job applications and for you to interview the candidates. Don’t hire the first person who applies or the first person you interview.
5. Take your time. Find the person who: (i) understands your business (ii) can do the work; and (iii) is the right fit for your business.
WHAT IS THE COST?
Employee:
1. An employee receives salary plus benefits. Before hiring, calculate the total cost of paying an employee. Remember there’ll be some start-up costs for an employee: e.g. a work space, computer, phone which will need to be paid by the business.
2. An employee will need training; this will take time. It’s only after the training is substantially completed that the employee can contribute fully to your business.
3. An employee will need to be managed. Consider how much time this will take; your management time and effort takes away from your work on the business.
4. There’s paperwork that needs to be done: government filings, payroll, etc. Make sure you understand the required paperwork and how to complete it.
Independent contractor:
1. An independent contractor charges a fixed rate per hour or per job so you can agree on the cost before the work starts. An independent contractor should have their own computer, office, phone, so there shouldn’t be any start-up costs.
2. As an expert, an independent contractor likely doesn’t need training.
3. An independent contractor should not require much management time or effort.
WHEN SHOULD YOU HIRE?
1. If you’re paying salary plus benefits of an employee each week, each month, and throughout the year, will this create a cash flow problem for your business? If yes, then it’s not the right time to hire.
2. The same applies to an independent contractor. If paying the fees or lump sum will result in cash flow problems, then you’ll have to wait.
3. It takes time to complete the job posting, to interview the candidates, to select the right person, to make the offer. It can be from 3 weeks to 3 months; allow yourself enough time.
3. Don’t hire if you’re too stressed or if you’re desperate. You’re likely make the wrong decision.
WHAT DO YOU NEED TO PROCEED?
1. Before selecting a candidate, check prior employment claims, check references, confirm their education. Maybe a driving record check is required for your business or criminal records check. Some of these checks will require the candidate’s consent.
2. You need a written agreement between the business and the employee or independent contractor. It sets out the terms of the relationship. For an employee, consider a probation period, so you can evaluate if the person is a good fit and, if not, you can terminate the contract. The contract will have to say what happens on termination of the contract.
3. Have your computer system set up for the necessary employee employment records, including government employment and tax filings, government workers safety insurance plan, (including payment of fees, if any).
Conclusion
Hiring the first person and hiring additional people is a big step. It’s nerve-wracking and its exciting. A plan makes it a manageable process and it will help you find the right person who either will make money for your business or save money for your business, or if you’re lucky, both.
Mary Ruijs, ASE