Blog>Trade>How to make your first hire as a trade business owner
Last updated: 17 November 2023
How to make your first hire as a trade business owner
It can be tough to know when to hire new employees, weighing the costs against the benefits to your business. This complete guide will tell you all you need to know as a trade business owner.
Going from sole trader to taking on new employees and having the responsibility of employing someone can be exciting. But it's nerve-racking in equal measure.
With a growing business, you're keen to expand, but hiring new employees can raise many questions:
How do you know when's the right time to hire?
How much does it cost to recruit and hire employees?
How do you check someone's right to work in the UK?
How much should you pay your employees?
In this post, we'll guide you through the steps to hire new employees. So you can be confident you've ticked all the right boxes and made the move to expand your team at the right time.
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When to hire employees for a small business
Identifying when you've hit the critical mass needed to hire new employees is not easy.
Poor cash flow management is one of the most common killers of small businesses. You don't want to hire too early before you can afford the financial commitment.
As a general rule, you want four months' worth of operating expenses covered in cash in the bank. With this, you should be comfortable enough, financially, to take on an employee.
Equally, you don't want to hire too late. Doing this could lead you to be overworked and your customer service levels to drop. Forcing you to turn away work.
So when is the right time to hire employees for a small business?
Is your customer service starting to suffer? - Finding yourself missing deadlines, failing to complete tasks, and unable to respond to customers and potential customers promptly? It might be time to hire.
Are you nearing burnout? - If you're frequently overwhelmed with the volume of work on your plate, and/or are spending a lot of your day on basic, time-consuming tasks, it could be a sign that you need to take someone on.
Are you turning work away? - Busy with work that you have to let work go to your competitors? Take this as a sign that you may need more hands on deck.
Are you doing all of the work, all of the time? - If you’re the sole employee, you’re naturally going to end up doing everything. But if you’re spending all of your time on low-level admin work, then it might be a sign you need to hire an employee.
Are you about to launch a new service? - Launching something new, whether it’s a new service or a new small business website, can lead to a surge in business. This can quickly overwhelm you if you’re on your own. Hiring ahead of this can be a good idea.
Subcontracting work is a viable way to do this. It reduces your financial risk but gives you the scope to broaden the range of projects you can take on, with access to a network of skilled tradespeople.
Should you hire bona-fide subcontractors or labour-only subcontractors?
With a growing workload or larger one-off projects in the pipeline, you need more hands on deck. But do you choose to hire a labour-only subcontractors or a bona-fide subcontractors? Let's work out what you need.
How to know when to hire more employees
You may be wondering how you'll know when to expand your team even further.
Follow the guidance above, but also consider whether you're outsourcing jobs that would be more cost-effective to bring in-house now that your business has outgrown its 'start-up' stage.
Refer to your business plan to understand whether more employees would be a viable step to help achieve the growth targets you set out for your business.
When to hire employees for your business
Spotting the gaps The best place to start is to take a look at your business's growth and workload. Are there any skills gaps in the current team? Do you have enough resource to cover your current workload? How many people would you need to be able to take on more ambitious projects? Knowing when to
Advantages and disadvantages of hiring new employees
Hiring new employees has the advantage of bringing new skills into your business, increasing productivity and revenue, and helps to make sure your customer service levels are maintained.
However, the disadvantages of hiring new employees are the wage bill, training costs, the added HR, legal, and regulatory requirements, and the risk of hiring the wrong employee.
As long as you make the right hire, and then invest the time settling your new recruits, maintaining a good work environment, and creating a positive team morale and work culture, it'll be well worth it in the long run.
You'll reap the rewards of a team that's fully invested in the success of your business.
Learn about how to attract and keep an amazing team.
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First hire FAQs
What is the first step in hiring a new employee?
The first step in hiring a new employee is identifying the skills gap you need to fill. That is, what role do you need to recruit for in order to meet the needs of your business?
Why is it so important to hire the right person the first time?
It takes time, effort, and money to hire employees, so ideally, you'll hire the right people the first time around. The right hire will be a positive addition to your company, helping with your growth and success.
Why might a business need to recruit new staff?
A business might need to recruit new staff to fill skill gaps, enable them to take on a greater workload, or take on larger projects that may require additional skills.
When should you expand your team?
As a business owner, if you're constantly overworked, having to turn work away, finding that your customer service is slipping, spending too much time on low-value tasks, and your growth is limited by your productivity, it may be time to expand your team.
When it comes to hiring someone new, it might feel daunting – but this is the exciting part of business growth. Hopefully, you’ll soon need our guides on how to hire employees or even how to build a team.
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