As an HR consultant specializing in small business, I talk with a lot of entrepreneurs and small business owners every day. And I’ve noticed an interested theme around how people define success in business—many of them include hiring employees as part of their definition of success. When people start a business, it’s right there near the top of the business plan, and they say they can’t wait to hire employees.
But at the same time, I’ve talked to a lot of business owners who say they got out of business ownership because of employees. Hiring and managing employees is, without question, one of the hardest parts of running a business.
What many entrepreneurs don’t think about in advance is what hiring employees really means from a liability standpoint. Yes, employees can help your business grow. But they can also set you up for failure.
I’m not saying don’t hire employees at all, but I want business owners to understand the responsibility that comes with hiring employees. It’s important to have those conversations up front and really be strategic about when and how you hire those employees.
Here are a few important questions to ask yourself before hiring that first employee.
Are you fully compliant with all government regulations?
These includes everything from the poster you’re legally required to post in your workplace to the paperwork and payments required by the IRS, Department of Labor, and other government entities. Missing even one piece of the legal requirements could put your company at risk, either from penalties or from an employee lawsuit.
Do you have time to hire, train, and manage an employee?
Employees require an investment of your time. The more employees you hire, the more time required. Even if you hire a total rock star employee, they’re going to need someone to set them up with computer access and train them on your specific procedures. And if you’re hiring multiple employees, you’re going to end up with some type of employee conflict at some point, which also requires your time.
I’ve seen a lot of companies hire an employee because they had “great potential.” But if you hire someone on potential, that means an extra investment of time. You have to invest the time or their potential doesn’t matter, and you’ll be setting them up for failure every time.
Do you have the tools for them to be successful?
This is something I see in sales positions a lot. A growing company decides to hire their first official salesperson, but they don’t have the tools necessary for that person to be successful. That could mean a lack of technology in the field or a lack of budget to reimburse meeting expenses or anything else.
When you look at the cost of hiring an employee, you need to factor in not only their salary, but also all the expenses necessary to set them up for success. If you can’t afford salary plus the tools, you’re not ready to hire that employee.
I want to reiterate that you can be a successful business without employees. There are thousands of solopreneur businesses out there that are a booming success that have no ambition to take that step. But if hiring employees is part of your business plan, be sure you write and budget into the plan what’s required to set them up for success. Only at that point will they help your company take that next step you’ve envisioned from the beginning.
Thinking about hiring your first employee and want to get it right? Why HR’s consulting services can help.