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Hiring Your First Employee: Best Practices for New Business Owners

Your business has reached the point where you no longer want or need to be the chief, cook and bottle washer. You’re ready to hire your first employee.

While you’ve already tackled the issues of how to start a business, the next step – hiring – carries with it a range of additional considerations. Based on a WSJ guide, below are some of the key factors related to hiring your first employee: best practices for small business owners.

Be sure you’re ready
Hiring an employee brings with it a range of complexities. You need to be sure your cash flow supports the salary, benefits, and taxes that come with adding to the head count. You also need to be sure you have reserves available if a hire does not work out, including possible severance pay and legal fees if litigation is threatened. You might also want to look into business insurance if you haven’t done so already – read more at

Also consider whether a full-time employee makes sense. Can the work be done by an outsourced professional services firm? What about freelance or part-time workers?

Decide what needs to be filled first
When you’re mulling small business ideas, you understand that at first you’ll be doing it all. So what tasks do you need to delegate to a new employee? What jobs, once delegated, allow you to best use your time?

Are you looking for a generalist who can complete multiple tasks? Or do you need someone who can focus on business development or technology?

For start-up companies, it’s usually best to look for people who are working in smaller workplaces, who can work with some autonomy and do not need hand-holding. While candidates with big names on the resume may be appealing, such candidates may face some challenges adjusting to an entrepreneurial endeavor.

Where to find talent
While there are tried-and-true resources where you can post jobs, for many entrepreneurs the best sources may be your own network. Consider asking your accountant, attorney, business advisors, mentors, former faculty members, colleagues and board members.

Using these intimate confidants has several advantages. For one, they are more likely to understand your company, its needs and how to complement you. For another, the time and expense of hiring can be greatly reduced.

While larger job boards are good at producing a high volume of candidates, they are not always the best at finding the specific skill set you need. Consider using niche job sites, professional organization job listings, and locally focused job boards.

As a last resort, you can turn to headhunters and employment agencies. Recruiters can take a great deal of the bureaucratic work and screening off your hands, but it comes at a price.

Get your procedures down
When it’s just you, the vacation policy, sick leave, paid holiday schedule, personnel policies, promotion guidelines, annual review process and myriad other regulations are a moot point. However, as noted at, as soon as you’re not the only name in the phone directory, you need to consider these important workplace structures to ensure you and your employee are treated fairly and expectations are crystal clear.

None of the steps necessary for hiring a new employee are daunting, but they do require some careful planning and thoughtfulness.