When should hire first employee?

[mfaixanali]

Hi mates,

I am working as information systems professional with various organizations across the country. Now, I am willing to form a team to setup a service providing company. I have a question regarding forming a team.

Q: When should a start-up should hire its first employee?

Thanking in advance!

[ghostboi]

probably as soon as you have the money

[LMP, Inc.]

Expansion, as soon as you have saved money. When your business has money in savings to run for a few months, then hire an employee. You have to know that the employee is worth the expense and that you also have the financial backing, income and stability for such an expense.

[andyredsox]

-Could you do more things to expand the business with the help of an employee?

Of course, because you will have more responsibilities taken from your hands so you'll have more time to concentrate on finding more ways to expand your business.

Yours is a service provider company, you need people to help you.

Don't be afraid to hire more hands if it means more revenue.

[Overhemd]

Making the decision to hire workers for your business is a big step that involves determining whether it's cost-efficient to hire someone and then deciding what type of help you need. Hiring full-time or part-time employees, hiring your children, hiring temporary help or perhaps using leased employees or independent contractors in your business are among your options.

For some businesses, workers are a necessity. For others, the decision is not as clear cut. Whether you're a small business owner just starting out or have grown your business to to the point where the work is too much for a one-person operation, you may find yourself toying with the idea of adding staff to help out. But even if you determine that you need the extra help, what kind of help, if any, can you afford?

Doing the Math...

How do you know how much you can afford to pay? Look at your operating budget. How much slack is there in it? How much money could be cut from other areas, so you could use it to pay an extra person? If you're considering hiring an employee, particularly a full-time one, don't forget to consider the minimum wage, payroll tax, required benefits, and workers' compensation implications.

There's an obvious tension between how much a worker's cost will drain your business's budget and how much extra money the worker's presence will bring in. Try to estimate how much extra income that worker would generate in the first year. This is not always easy to do. If the worker is going to sell your product or services, it will be easier to figure out how much extra income he or she would bring in than if the person is going to perform data entry or cashier duties.

What if there is an absence of a "cause and effect" relationship? Consider other ways that bringing in help could generate more income:

- Would you have more time to market your services and expand your business?
- Would it allow you a chance to produce more products or serve more clients?
- Would you be able to give your customers more efficient service or quicker delivery, with the result that higher quality would lead to more customers?

If the answer is "yes" to any of these, try to estimate how much extra business would be generated by more, faster, and better delivery of your product or service. If you're fairly sure that the extra business would amount to more than the cost of a worker, then you are in a good position to hire someone.

What if, according to your calculations, the added business does not outweigh the what you would have to pay to add staff? If you're still sold on the idea of getting someone to take over some of your work, then look for other alternatives to hiring a permanent full-time employee. Hiring a part-time employee, hiring your children to work in your business, or using temporary help may be affordable staffing options. Leased workers and independent contractors may also fulfill your staffing needs without the cost and hassle of hiring an employee. And if you're willing to get creative, there are very effective little to no-cost staffing methods that can meet your needs.

[MikeBFS1]

When hiring on a new employee it is a matter of being on the horizon of merging into an new area of your industry e.g., market expansion that will require the additional employee(s). As Junior member: Overhemd pointed outin his/her post that while leased workers and independent contractors are relatively cheap. In contrast,they(the new employee)are also not tied to the same obligations and responsibilities as a full-time employee.Therefore, it may leave you in a "bind" if your "independent contractor" is not available for an extended period of time when your monthly productivity demands are high.

[Overhemd]

Overhemd pointed outin his/her post that while leased workers and independent contractors are relatively cheap. In contrast,they(the new employee)are also not tied to the same obligations and responsibilities as a full-time employee.Therefore, it may leave you in a "bind" if your "independent contractor" is not available for an extended period of time when your monthly productivity demands are high.

Excellent point!

[ChrisAplin]

The simple answer is... when you can afford it.

As the CEO / C level executive your job is to push the company forward, not doing the daily work to keep it alive. If you can afford an employee, it's time to write checks.

[Robert90]

just extra efford will become the hire person...

[Steffan Gardner]

are you aware of the expends regarding assurances etc..?

[Fred Gold]

Know how big your overhead is and at what point handling the business end of things on your own becomes too burdensome to the point it can be detrimental to its growth. You never know when success comes knocking, and at what tempo and frequency, no less.

[Vicky Matthews]

As soon as you have the budget and tools that you'll be using in the business that you own...