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4 Tips for Hiring Your First Employee in 2013

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4 Tips for Hiring Your First Employee in 2013

By Caron_Beesley, Contributor
Published: December 31, 2012 Updated: January 2, 2013

Are you turning down work because you simply don’t have enough time or hands on-board to take it on? Thinking of hiring your first employee? Congratulations – your business is doing well!

But before you advertise for a new employee, proceed with caution. Hiring staff is a commitment to the future, and should be made in the context of your long-term growth plan and whether you really want to be an employer. Here are some points to consider, plus some tips for determining whether you can afford to hire your first employee.

1. What is your vision for your business?

When faced with too much work, solopreneurs are often encouraged to hire up, but is that what you want for your business? Is it your goal to become a larger business or remain a sole proprietor? Could you farm off work to independent contractors or outsource certain functions to take some weight off your shoulders? Could you team with other businesses to complement your services? For example, a graphic designer or web designer could “partner” with a marketing consultant to offer customers a range of full-service solutions.

Virtual assistants are another non-hire staffing option and can help you with administrative and even basic sales and marketing tasks. Temporary workers might be a short term option, but be aware: many laws and regulations that apply to full-time employees also apply to seasonal or part-time employees.

The following articles offer some tips for alternative sources of labor:

2. Where do you need help?

If you’ve decided to bring an employee on board, your first step is to project your business workload and identify areas where you need help. What does your workload or pipeline look like for the next 30 days, 90 days and six months, and which jobs do you need help with? What are you doing now that you could offload or have an employee augment? Perhaps you need skilled labor out in the field, or a sales rep to help you grow your business. Or, maybe you simply want to free up your time to concentrate on bringing in and fulfilling business orders.

3. Can you manage people?

Don’t overlook this important consideration. If you’ve managed employees in another occupation, how successful were you at making good hiring decisions? How many bad ones have you made? 

4. Can You Afford It?

Working out whether you can afford to hire is a common stumbling block. Start by building a realistic picture of the costs and overheads that your business will incur. These include:

  • Wages
  • Unemployment Tax – State unemployment taxes vary by state, so check with yours. Federal unemployment tax is 0.8 percent on each employee's first $7,000 of earnings.
  • Workers Compensation Insurance – For new employers, this figure depends on your industry and the job performed. Again, check with your state about your expected rate.
  • Medicare and Social Security Taxes – Currently, Social Security tax is 6.2 percent on wages up to $113,700, and Medicare tax is another 1.45 percent.
  • Recruitment and Training Costs – These can run into the thousands, but, you can reduce them by using networking and referrals to uncover candidates.
  • Benefits – Optional!
  • Payroll Costs – It takes time and money to administer payroll and calculate taxes and withholding. Examine the cost of payroll software that can help streamline this task.
  • New Equipment – Computer, desk, other tools.
  • Software Licenses and Phone Data Plans
  • Insurance for Company Vehicles

Next, look at last year’s income and expenses and factor in the projected annual cost of an employee and the extra income one might make possible. Then, consider your pipeline and cash flow. Can you afford to live with reduced profitability for a few months as your business ramps up? Calculate what you can put into generating new business if you are freed up.

You don’t have to do this all on your own. Organizations like SCORE, Small Business Development Centers and Women’s Business Centers have resources and experts on hand to help small business owners navigate this process. Find assistance in your community here.

Additional Resources

 

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Thank you for this article. I love reading your blogs. For me I think outsourcing is best right now. Maybe one day I can hire someone.
Great article. I have been thinking of hiring seo guy to work on my Insurance Blog but there are many laws in my country which are making hurdles so Currently my team is doing overtime for me.There are so many different things to consider when hiring a new employee it's good to take your time and really consider what it is that you're looking for as well as if it will be feasible to the company Thanks so much !
thanks you so much
You have combined some of very interesting facts . It might be useful for many peoples around here . :)
Hello Caron, Great article with many good tips!! We as a Local moving company are always considering hiring new staff especially during our busy time. We have to step back and seriously consider if we can keep them employed as our type of business fluctuates so much. There are so many different things to consider when hiring a new employee it's good to take your time and really consider what it is that you're looking for as well as if it will be feasible to the company.
I like it very much thanks
very nice
Very nice advice Caron, Employer has to think about all aspect before hiring someone, but if you want employee with good qualification and experience then this is not a bad deal as, if you give facilities to your employees then they will also give their best to your company.
Thank you for the great tips. However, I am concerned about how the Affordable Health Care Act will impact small businesses and I think there will be a reluctance for small business owners to hire full-time employees in order not to be subject to the health care mandate. This is a trend that will not bode well for business owners or their employees. What do you think?
Great article. The Bureau of Labor Statistics show that the average turnover rate is approximately 3.7% per month. In fact, one-third of people are in the wrong jobs, one-third of people are not a cultural match for their company, and more than one-half of employees are not properly trained for their current position or for the company's future needs. Managers tend to fall into the same traps again and again when hiring employees. Know exactly what you want in an employee. What skills, values, traits and habits are shared by your best employees? Don't settle for less than exactly what meets your needs.

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