how do you know when it’s time to hire your first employee?

This week, I took a big step in my business, and hired my first employee.

It’s actually been a long time coming, as I’ve been waiting for Amy, who will take on the role of production manager, to finish grad school.

It’s a big step, but I feel absolutely certain it’s the right step for my business. But that brings up a question that I know many of you are wondering:

“How do I know when it’s time to hire my first employee?”

Well, here are five steps you can use to help you decide if hiring someone is in the near future:

1. Figure out what kind of work you need done. Before you can begin to think about hiring an employee, you need to figure out what kind of work that employee would do. Every time I was working in my studio or office and thought to myself, “someone else could do this,” I made a note in my phone.

When you’re thinking about what work needs to be done, you should also think about what work could be getting done if someone else could do what you’re currently doing. I decided to hire someone to handle the bulk of my (jewelry) production because I saw the same pattern all the time. I would leave a trade show full of all kinds of design and marketing ideas, but never get around to executing them because I had to fill orders. Having someone to help with production frees me up to tackle activities that will help grow my business.

2. Know your numbers. One of the biggest things I got out of tracking my numbers last year was the confidence to know that I could afford an employee. Because I now know exactly how much money I need each month to run my business and pay my bills, I was easily able to figure out how much money I need to bring in each month to afford an employee.

When you’re calculating the cost of your potential employee, keep in mind that it’s not just the cost of their hourly wage. Taxes and Social Security mean you’ll be paying more than their set hourly, not to mention any new tools, equipment, or materials you’ll need to purchase to help your employee do their job. Before you hire someone, make sure you’ve really done the math on all the potential costs (and the potential increased income). If you aren’t comfortable with numbers, have an accountant give you advice.

3. Build up a cash cushion. Being able to afford an employee on paper is one thing. Being able to pay them is another. One of the other reasons I felt now was the right time to hire someone is that my business has some cash reserves. What this means is if I don’t meet my sales targets for the next few months, I can still afford to keep Amy around. The worst thing you can do is hire someone and then have to fire them after one bad month.

4. Test the waters. Before you take on an employee, you may want to test things out with other types of help. For instance, if it’s mainly office, administrative, or online tasks that you need help with, you could hire a VA. Having a VA frees you from some of the commitment that comes with hiring an employee.

Before I hired Amy, she did piecework for me during breaks from school. This allowed us to develop a working relationship, it allowed me to know that her skill was up to the quality I needed, and it freed up some of my time. Having a postive experience with Amy before hiring her as an employee makes the transition into employment a lot easier.

5. Decide what kind of business (and life) you really want. Ultimately, when it comes to hiring an employee, you need to decide if this is the direction you want for your life and your business. Running a business with employees is very different from running a one woman show. My dream has always been to create a business that provides meaningful employment for other people, so hiring someone was the next logical step.

Whatever your decisions, whether it’s to hire someone now, in the future, or never to hire, you need to make sure it’s aligned with the way you want your business, and your life to look.

Once you’ve made the decision to hire someone, the hiring process itself doesn’t have to be scary or complicated. I recommend picking up a copy of Hiring Your First Employee. While it’s a little dry (even I couldn’t read it cover to cover) it does give you all the information you need to successfully (and legally) hire your first employee.

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