As a small business owner you are the one spinning all the plates – you are the social media manager, content creator, designer, buyer, you’re even packing products some of the time. But what about when your business starts to grow and you need to think about hiring staff. Where do you start? Mandy Hamerla is the founder of Modern HR, and the go to expert when you’re scaling your business. I asked Mandy to be a guest on Episode 42 of my podcast Start, Scale Succeed to share her expert advice for when and how to hire people for your small business.
How do you know when it is the right time to hire people for your small business?
- Commons signs are you’ve got too much work on your plate and you feel like you are reaching burnout.
- It could be that you have big ambitions, and know you need to free up your time for business development. What is going to help you achieve your goals faster?
- It’s also about looking at yourself, knowing your area of genius and the things that you struggle with. For instance if you struggle with bookkeeping and the receipts, and aren’t very good at paying attention to detail, this is a task to outsource.
The costs of hiring people for your small business
A lot of people’s concern is about the cost of hiring new staff and whether it is worth it. Can you afford it?
But equally can you afford not to? If you can free up some hours in your week, what is that worth?
Estimating costs can be tricky, it depends on the role you are looking for, whether you are thinking about contractors or employees etc. The best thing to do is talk to your accountant, who will be able to advise you as to what you can afford.
Just because you outsource once doesn’t mean you need to continually do it. For instance I outsourced creating content in Canva to a VA. It took them 90 minutes, it would have taken me a day and a half. It was more beneficial to pay a VA about £30 an hour to put that together.
What should you consider regarding hiring contractors vs hiring staff?
There are 3 main ways that you can hire:
- Freelance Contractors – people who are self employed
- Employees – they could be permanent or part time, and are on fixed term contracts
- Call to Workers – They may be on a zero hours contract, you just give them work when you have it.
Employees have lots of rights, self employed contractors don’t have many rights, and a call to worker is in the middle. There are pros and cons for all these different types of hire. One of the biggest things to consider is flexibility & commitment.
- A self employed worker may be best if it is your first time hiring, and you can test things out. You can hire a virtual assistant, an inbox manager, a picker, a packer etc. and test the role before committing to it.
- An employee is often cheaper to hire per hour, because you’re adding on pensions and holidays. A self- employed contractor is building that into their cost.
- With a self employed contractor, you don’t really have control over when or where they work – as an employer you’ve got much more control.
- With an employee, no matter how many hours you are working you have a duty to automatically enrol your employees into the pension scheme.
What should you be looking for when hiring people for your small business?
View hiring as an investment rather than a cost.
Be really clear on the outcome that you want. So in 3 months time, with this person working for you, what will be different in your business? What will you have achieved?
This will allow you to assess their performance, and make sure you are getting what you want from them. It will also mean you can give them clear direction, clarity about their priorities, what they need to have done and by when, which will be really helpful for them.
Look to hire for your weaknesses – for instance someone who thrives on the admin that you hate. The collective strengths of the team is really important, and people you can bounce ideas off.
The key questions to ask yourself are:
Can I work with this person?
Do they have the skills to do this job?
Personal values are really important, and having diversity in the team. You don’t want someone who is an exact clone of you who thinks the same way, but brings a different perspective and outlook.
With a product based business, you want to make sure that your team is understanding of the customer base that you are serving. You want them to be able to help you think about different objections people may have to buying it, or come up with new ways to add value and serve the customer.
What do you do if your hire doesn’t work out?
Sometimes it won’t work out – and a lot of business owners take that badly. It can be horrible when you have invested your effort, time and energy into hiring someone. It can be upsetting for both of you, and put people off hiring again. So if you have had a bad experience, you are not alone.
The key is to learn from it, and make sure that you don’t repeat the mistake for the next person
Reasons a hire doesn’t work out are varied:
- Sometimes the business owner is very excited about hiring, and hasn’t really thought about what they need
- There can be a mismatch in terms of skills sets and what the business owner needs & is expecting
- Sometimes the recruitment assessment hasn’t been strong enough – people can exaggerate during interview about what their skills and experiences are, this is why reference checks are really important
- Sometimes it’s just not a good match, personalities clash
On the other side, you need to make sure you free up the time to invest in your new hire
- Don’t just give them a list of things to do, people need more than that
- Have a proper induction process which includes your vision, what your goals are, your expectations, how you are doing to work together, and what support they will need to do the job
There is a responsibility on you to make sure that you have given your hire every chance to succeed. If they are falling short, make sure you are giving feedback and the opportunity to improve.
If it is a self-employed contractor it is much easier to terminate the contract, and let them know you don’t require their services anymore in line with their terms.
What about probation periods?
A probation period is a good option, as it allows everyone to make sure that it is a good match, and you have a lesser notice period during this time. So if it doesn’t work out, you’re not having to pay them / stuck working with them for a month.
Make sure you have checks in during this period, to make sure you are happy with their work, and they are happy with you. The average probation period is 6 months, even for a very junior position, because 3 months often isn’t enough when people are on holiday, or working virtually.
The importance of contracts when hiring people for your small business
The contract is really important for businesses of any size, but particularly for small businesses when building up a suite of things that will protect you.
People think ‘I’ll just download one or put one together myself’, and then you have contracts being sent out where no one really understands what is being said.
- It is vital you understand your contract, and that it has things in there like who owns you IP confidentiality, and non compete agreements.
- You want your employees to have signed off to say they are keeping your strategies and ideas confidential.
- And you want to make sure that they are not going to work for you for 6 months, learn everything, and then set up in competition.
Make sure you consult an expert, but don’t be put off from hiring. You need to hire in order to grow. Running a small business you take risks and make decisions every day. Most people want to do a good job, and come and work for you. What the contract provides is peace of mind.
How can you work out what to pay people when hiring for your small business?
- Most recruitment agencies will publish free salary guides
- Google what the role is & salary benchmarking survey
- Work In Start Ups, or other popular job sites for small businesses will give a gauge of what people are paying
As a small business, remember that although you may not be as competitive on salary as a large business, you can offer other things to your employees such as flexible hours, free products, discounts, working from home, an amazing location or more. It’s not just monetary, communicate your vision and what you are trying to achieve – this will attract a lot of people.
Building a team
There are different ways of building a team, some people love a small lean time, others get energy and ideas from managing a bigger team. There is no right or wrong.
If you are scaling a business you can’t do it alone.
Mandy’s Three Top Tips For Hiring
- Be really clear on why you are hiring, and what you need from it
- Invest time in thinking about how you are going to assess the person that you are interviewing – the questions you will ask, what you criteria is it
- Get a good contract in place, this is a vital investment for your business
I hope that this post helps you to continue on your journey to success and if you need any extra support then check out my free resources on my website, follow me on Instagram, subscribe to my monthly newsletter or get in touch at email@example.com
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