Taking on your first employee

In my previous blogs, I discussed how I set up my own business and some tips for obtaining your first customers. Unless you are setting up to work purely on your own, taking on your first employee will be your next mission and is one that shouldn’t be taken lightly.

Employees set the first impressions of your business to your potential customers and it goes without saying that it is extremely important that you choose the right people. I always maintain that there are two main reasons for employing someone and if you don’t feel they tick both these boxes then you shouldn’t bring them on board. Firstly, employees are expensive both in financial and time management resources so resist for as long as possible employing someone to do the work if you can realistically do it yourself and you have the time to do it. In short, don’t employ someone just because you can’t be bothered to do the work yourself. Secondly, focus on employing people who have the skills that you do not possess.

Trust

If there is one piece of advice you take from this blog, it’s employing someone you trust as your first employee. The majority of my first employees were family or people I knew, meaning I could trust that when I was out with clients the office was in safe hands and everything was under control.

Of course, there is a fine line between employing someone you trust and separating work and pleasure. Working with your friends may seem like fun, but at work they are your employees. You need to ensure that both you and the employee understands the distinction. That doesn’t mean that you can’t have friends at work. Spending time with colleagues over drinks and in social situations where you are sorting out business issues in a relaxed environment can be extremely constructive. But merging your staff with your mates can result in serious problems if they are not performing to the standard that you expect. At the end of the day you are the boss and they are an employee and many people struggle with this. But there are numerous stories of successful businesses that operate with family members and friends. You just have to set the ground rules.

Quality

There are loads of people looking for a job and the trick is to find the individual with the right skill set and characteristics for your business. Try not to employ the first person you find and wait to find someone who is right for your business. It might take that little bit longer and put more pressure on you especially if your business is rapidly expanding but try to focus on quality over quantity. You might have to pay a little more for the right quality but trust me when I say that you will reap the rewards from better productivity, less training and more responsibility. Employees are expensive and you don’t want to have several people doing the same job when you could pay one extremely skilled and motivated individual who will get the job done more efficiently. In short, avoid the ‘bums on seats’ approach!

You should focus on hiring individuals that have a specific skill you lack or an ability that would be extremely beneficial within the business; whether that be technical or sales expertise. Will they become a valuable asset to the pre-existing team and will they generate you additional income.

Probably the most important hire you will ever make will be your financial individual. Unless you are an accountant yourself, having a good right hand man/woman that will look after the finances, pay the bills on time, sort out the tax and VAT payments, watch and challenge the pennies and collect the invoices is absolutely priceless. Most businesses that go bust do not have the individual because they don’t sell their products. They fail because they run out of cash. They don’t have good credit control systems in place, don’t have monthly management accounts to check the amount of spending and have no business forecasting in place. What happens then is that at the end of the month you can’t pay the wages or the rent or your suppliers. It goes wrong pretty quickly after that! The saying ‘cash flow, cash flow, cash flow’ is probably the most important lesson you can learn in business.

Employment Contracts & Job Descriptions

The trust vs quality equation is extremely important for any new business and you won’t always get it right. You may find someone that is highly skilled but their focus is learning your business or secrets and then leaving to set up on their own possibly with some of your clients. Conversely you could employ someone who you trust with your life but they can’t do the job you actually want. At the end of the day it boils down to a gut feel. Sometimes you get it right and sometimes not. So a good piece of advice is to ensure that you put in place a good contract of employment that protects you and your business in case you make the wrong choice. I always strongly recommend seeking specialist advice here rather than just downloading something from the internet or not bothering with a contract at all. A good contract will more than make up for the cost of preparing it and you can use it for multiple employees.

And don’t forget the job description! Spend some quality time on this. What do you want them to do? What are their responsibilities and authorities? What does success in their job role look like for them and for you? I can’t tell you how many times over the years I have heard an employee say to me ‘that’s not in my job description’ or ‘I thought I had the authority to do that’! A job description will set out your expectations for the role and give the employee clear guidance as to what is expected by them. Everyone then reads off the same hymn sheet.
As a business owner you should also be aware of basic employment law. Employee rights are vast and varied and the penalties for getting it wrong can be crippling, especially for start-up businesses. You don’t need to employ a dedicated HR department. I didn’t create this role until I employed close to 100 people. But if you don’t take responsibility for understanding the law make sure you have someone who does!

I’ve employed countless people over the years that on paper tick all the right boxes but at the end of the day don’t cut the mustard. That’s life. It sounds hard but sometimes you just have to take the plunge and let them go. It’s a horrible experience and contrary to what people tell you, it doesn’t get easier with experience. Unless they have stolen your cash, letting someone go because they can’t do the job, even though they are trying very hard, is extremely tough. It’s the worst part of being a boss unless you have a heart made of stone – which I don’t. But your first loss is the best loss. Don’t put off the inevitable. If it’s not working then it’s not working. And if you can’t bring yourself to do it, then employ someone who will!

Business culture

As the owner of the business it is you that sets the culture of the business. I cannot over-state this enough. Look after your staff, care for them and make yourself approachable. Too many times I have seen bosses and business owners that have no regard for their staff and create a culture of fear sometimes bordering on bullying. Over the years I have been told that I am too soft or not ruthless enough to be successful in business. Agreed, I don’t shout at my staff, I don’t ask them to do anything that I wouldn’t do myself, I care about their welfare and go out of my way to find out how they are doing in their personal lives. I try to remember every individual’s name (no mean feat with 200 people I can tell you!) and will happily give up my time if any one of them wants to ask a question. I make it my mission to understand what they are doing at work and their individual job roles. I share a good chunk of the profits of our business with every single individual. And where did that get me? A successful group of companies with a combined turnover of almost £30M.

In summary

In all successful businesses it is your people that generate the wealth. Caring for your staff and making them feel valued and appreciated will in return work in your favour. Make the work environment a place where people will want to work, and trust me on this, they will invest three, four, five times the effort into the business. I’d like to think my workforce have respect for me because I have respect for them. Too many bosses expect or demand respect. But you have to earn respect in your words and actions. Once you get it, it is hard to lose it.