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How to make your first hire as a trade business owner

Ready to make your first hire? Congratulations! Not sure where to start, when, or what the process looks like? Don't worry, we've got you covered. This complete guide will tell you all you need to know as a trade business owner.

Going from sole trader to taking on your first hire and having the responsibility of employing someone for the first time can be exciting but nerve-racking in equal measure.

With a growing business, you’re keen to expand, but hiring your first employee can raise many questions:

  • How do you know when’s the right time to make your first 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 your first employee 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 your first employee 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, if you have about four months’ worth of operating expenses covered in cash in the bank, you should be comfortable enough, financially, to take on an employee.

Equally, you don’t want to hire too late, causing you to be overworked, your customer service levels to drop, and you to be forced to turn away work.

So when is the right time to hire employees for a small business?

  • Is your customer service starting to suffer?

If you find 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?

If you’re so 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.

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 labour-only subcontractors or bona-fide subcontractors?

How to know when to hire more employees?

After you’ve made your first hire, 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

Steps to hire your first employee

Before you take on your first employee, there are a number of things you need to do. Many of these steps are legal responsibilities that come with the territory of being an employer.

Decide what salary you’ll offer

When you start the recruitment process, you’ll naturally ask the question, “how much should I pay my employees?”

As a baseline, you must pay your employee at least the National Minimum Wage.

However, think about what your business can offer that would attract a good selection of candidates. If you’re unable to offer high salaries, could you offer flexible working or appealing benefits?

Within the construction industry, if you hire a subcontractor, you must register for the Construction Industry Scheme (CIS). This makes sure that all payments from contractors to subcontractors are accountable.

Check a candidate’s right to work

As an employer, it’s your responsibility to conduct employment checks. Fail to do this properly and you could be sent to jail and face an unlimited fine. But how do you check right to work?

Employment checks include checking a candidate’s legal right to work in the UK, a DBS check if necessary, and health checks, if required for the role. Find out how to check right to work on the gov.uk site.

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Obtain Employers’ Liability Insurance

As an employer, you are legally obliged to hold Employers’ Liability Insurance. Without it, you leave your business exposed to the possibility of a £2,500 fine for every day you’re not properly insured.

How to get Employers’ Liability Insurance

Your Employers’ Liability Insurance can be arranged as a part of your business insurance needs.

Checkatrade members receive exclusive rates on insurance policies with our partners at Covéa.

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Enjoy discounts on insurance, van leasing, tools, fuel, workwear, and more.

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Register as an employer

You will need to register as an employer with HMRC, up to four weeks before you pay your new staff. You’ll then be able to use HMRC’s PAYE Online service to send them payroll reports, access the right tax codes for your employees, and more.

You’ll also need to provide a written statement of employment and check whether you need to enrol your employee into a workplace pension scheme.

You also have a responsibility as an employer to make sure you comply with the Health and Safety at Work Act 1974.

To learn more about the hiring process, including how to prepare a job description, advertise for staff, and candidate red flags to look out for, take a look at this article.

How to hire employees for your growing business

What’s the average cost of hiring your first employee?

If you recruit through an agency, it could cost you between 20-30% of your new hire’s salary. As well as the cost of recruiting employees, you’ll also need to factor in the time it takes to train new team members.

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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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 person the first time around. The right hire will be a positive addition to your company, helping with its growth and success.

Who to hire first in a business?

Who to hire first in a business will depend on the existing structure of your business, the skills gaps you need to fill, and what’s required in order to fulfill your business plan.

Why might a business need to recruit new staff?

A business might need to recruit new staff to fill skills 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, you’re spending too much time on low-value tasks, and your growth is limited by your productivity, it may be time to expand your team.

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