I started my own business a few years ago, and things are going great. I have a lot more work than I can handle. I want to hire a right-hand man, but I’m worried about whether my clients will accept him, and what if he’s not as good as I am? I don’t know anything about hiring. How do you hire a trustworthy second-in-command?
Hiring Employees is a Leap
Moving from solopreneur or working with contractors (paid on “1099” basis) to hiring employees (paid on a “W-2” basis) is a real leap for most small business owners. Employees are paid every two weeks, whether or not you bring in revenue, so you need to have confidence that you can win enough steady work to cover your payroll. If you aren’t already forecasting your revenue and cash, now is the time to learn how to do that. Get a mentor, business coach, or consultant who can teach you how to prepare for hiring. You can get a free mentor from SCORE.
It Will be Harder for a Little While
Before you look to hire your lieutenant, set aside some extra time and money. While hiring will eventually free up your time and enable you to do the work that you enjoy most, in the short term, it will cost you time and money. You will need to train and supervise your second-in-command, which will take extra time and energy. And, that time will almost certainly come at the expense of revenue-generating work that you would otherwise be doing. Scaling up is going to hurt in the short term; be ready for that.
Employees Aren’t Always Fun
You will expect your employees to be there to help you, but their priority may be what they want. While it is important to set your expectations clearly and follow up consistently, you cannot expect your employees to have an entrepreneur’s work ethic unless you are going to give them equity. Many small business owners are disillusioned by their employees’ constant requests for less work, more money, and other perks. Managing people is a skill that improves with experience; don’t expect it to be fun in the beginning.
Create a Process and Stick to It
Decide in advance what your hiring process will be, and stick to it. Set expectations for candidates during your screening call – where they will work, when they will be on the clock, and whether there is travel. Create a clear job description that explains what you require and what the job entails. Also, research shows that the interview is the least reliable indicator of whether an employee will be effective. People can charm you, so make sure you have concrete ways of evaluating their capabilities. Where possible, use a practicum to see how they perform, and set up a probationary period for performance evaluation.
Don’t Hire Your Friends
When you hire a #2, it is normal to be worried about trust, so many people hire one of their friends. The problem with hiring your friends is that they may have expectations based on your relationship outside work that do not apply at work. A friend may be disappointed with your guidance when an employee who has no expectations will not. Also, if the relationship goes wrong with a friend, that may affect the rest of your social circle. It may be daunting to hire a stranger, but the relationship is very clear: You will be the boss.
Don’t Just Hand Over the Keys
It takes time to build trust. Add responsibilities gradually for your new hire, and make sure you have systems in place (called “controls”) to protect yourself from fraud and other employee misbehavior. No matter how trustworthy your new employee seems, make sure that you have regular, direct conversations with your clients, so you know what’s going on. Trust and verify.
Employees won’t have the same commitment to your enterprise that you do. They may learn the business from you and then resign. They may try to take your clients with them. Expect them to behave in their own self-interest, and protect yourself by setting up clear employment agreements (including “non-compete” terms) and by putting terms in your client contracts (“non-solicit” terms) that prohibit clients from making offers to your contractors and employees. It is expensive to work with an attorney to design clear agreements, but doing so may save you a lot of hassle later on.
See from Your Employees’ Point of View
If you want your employees to be happy and productive, you will need to offer them a value that is consistently better than their alternatives. There are many ways to do this – it’s not always about money – and the best way to figure out what works for your employees is to listen to them. Learn what motivates them, and find the overlap between that and what you have to provide.
Many People Decide Not to Manage Employees
Employees require a lot of energy and attention, and not everyone is suited to be a boss. Many small business owners decide to remain solopreneurs, where they control the variables and can avoid the stresses and hassles associated with employees. If you decide to go that route, make sure that you have adequate insurance (such as a “key person” policy) to cover your potential disability or death, since you are the business.
Hiring is a leap, but if you can meet the challenge, you will be rewarded by the ability to scale your business to make it more sustainable, and possibly even valuable enough to sell. And, in the shorter term, you may even be able to take a vacation!
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