8 Tips On Doing Your Due Diligence Before Hiring Your First Employee

This is the final installment in a series about the steps small business owners need to take before hiring their first employee.

If you’ve already taken a hard look at your business and determined the right time to hire your first employee as well as figured the value your time, you’ve done the heavy lifting.

"For a sole proprietor or someone who has a boutique, there's really not a lot invested in bringing in that first person,” Bill Horton, a small business coach at BizFix and educator for Mercy Corps NW, says. "They can usually find somebody from a referral from their friends, or maybe they're using Craigslist or LinkedIn to put out a post with a very brief job description."

Horton believes the initial time investment of finding that first employee “is really minimal” compared to the emotional consideration of categorizing what tasks can be done by an employee and then handing over the reins. “The hardest thing for them [business owners] to decide is what do they need—what's the actual job description for bringing a new employee in; what's that other person going to do," he says.

And how are you, the business owner, going to let someone else sit in the driver’s seat—at least as far as some designated tasks are concerned.

The rest is simply a checklist of legal and technical requirements, and Neighborhood Notes has compiled a list which will provide you with all of the resources you need to comfortably and lawfully hire your first employee.
 

Preparation

If you’re thinking of hiring someone you already know, take a long hard look at that person and make sure he or she is someone you are sure you can work with closely.

1.  Write a specific job description. Before you can think about searching for the perfect employee that has all the right skills, you need to clearly define on paper what skills you are seeking. This will help you set expectations for your new hire while allowing you to relinquish control of certain aspects of your businesses. More on writing effective job descriptions here.
2. Next, write an effective employment agreement. You’ll likely need consult a lawyer to define the exact areas that relate to your business and industry, but here’s an example of a basic agreement as well as some tips on writing an employee handbook.
3. Find the right employee. Chances are you might already have someone in mind or are thinking about posting to one of the exhaustive employment or classified outlets like Craigslist or Monster, but you can also utilize social media to drum up some candidates. And once you’ve found someone who seems like a good fit, you may want to perform a pre-employment background check before taking the time to set up an interview.
4. Interviewing candidates is an artform by itself. If you’re thinking of hiring someone you already know, take a long hard look at that person and make sure he or she is someone you are sure you can work with closely. There’s a plethora of information out there about about asking the right questions and other effective techniques, so educate yourself and be aware of proper interview etiquette—what you can’t ask. Take a look at Monster's Small Business Hiring Guide to get started.
5. The U.S. government's Small Business Administration (SBA) is your go-to resource for all the regulatory requirements you will need to fulfill from setting up records for withholding taxes to verifying an employee's eligibility to work in the United States to obtaining unemployment and workers' comp insurances. Simply enough, here are the SBA’s 10 Steps to Hiring Your First Employee.
6. Step 10 on the SBA’s list gets a bit more involved and warrants another look. Familiarize yourself with the requirements and risks of hiring an employee. Federal and state employment and labor laws cover everything from benefits and wages to discrimination and harassment. Get organized by setting up record keeping not only for taxes but also about your employees and for various state requirements, and consider the safety of your workplace using the Occupational Safety and Health Administration's Quick Start tool.
7. Just because you’re an expert on running your own business doesn’t mean you’re good at teaching someone else how to run it. Learning how to manage others is a skill and the SBA’s 10 Steps includes this classic line: “While you aren't legally required to be a good manager, it sure helps when trying to recruit and retain good employees.” Read the SBA’s Guide to Managing Employees for more on hiring, motivating and directing employees.
8. Employees like to be paid, and paid on time. By following the above advice from the SBA, hopefully you already have most of the necessary requirements in place, but here’s the SBA’s payroll overview: 10 Steps to Setting Up a Payroll System.

Some Final Advice

Be clear about your expectations—like how many hours you hope to offer—but let your new employee know that this is a new process that you’ll be figuring out together, and things may change.

If you did a cost-benefit analysis, you likely have an idea of much money you can afford to spend on your new hire. That said, it’s wise to be honest with your employee.

Horton says the idea of, “What if I hire them and I don’t have work for them?” can be crippling.

"Set up boundaries with bringing a new employee in," Horton continues. Be clear about your expectations—like how many hours you hope to offer—but let your new employee know that this is a new process that you’ll be figuring out together, and things may change.

Also, be prepared to let go. 

This can be really hard for business owners "because they're used to controlling all the issues and all of a sudden someone else is making a decision," Horton says.

"It's really thinking about what are the tasks that someone else could do for you," he continues. 

So, stick to thinking about spending your time where it’s most valuable and let someone else manage your other tasks.

And, while you’re at it, enjoy a day or two off!

Read parts one—when to hire your first employee—and two—how to figure the value of your time—in this series for more advice on hiring your first employee.