While many small business owners try to operate as lean as possible, there comes a point where you need extra help so you can focus less on day-to-day tasks and more on growing your company.
Because the success of any business depends on the team, finding the right employees is crucial. Strategic hiring can have an enormous impact on company culture and business development. Before starting the recruiting process, small business owners must have a clear hiring strategy, position definition, and interview process to ensure each new hire is a passionate, engaged, and committed team player.
How to know when you need to hire
Timing is critical when growing your team. Doing so too early can deplete capital that should be used to scale your business, while hiring too late puts you at risk of sacrificing quality and burning out your current staff. Because every business is different, there is not a one-size-fits-all solution. It’s about paying attention to business growth, being able to manage demand increase without sacrificing quality and time, and having sufficient cash flow to pay for a new hire.
When you do get to the point where hiring is non-negotiable, think about the type of work, tasks, and hours you need help with. This can help determine whether you need a full-time or part-time employee. If the type of work is seasonal or project-based, it might be worthwhile to hire a contractor because employees have an ongoing cost for the business.
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Deciding between full-time employees and contractors
Small business owners need to understand the difference and implications of permanent vs contract employees to make the right decision for their business.
Permanent employees work for one company and must adhere to schedules and locations set by the employer and are responsible for completing ongoing or short-term tasks. They use tools and resources—like computers, desks, Wi-Fi, etc.—provided by the business and are paid a predetermined salary or hourly wage.
Contract employees have more flexibility by working for multiple organizations and managing their workload. They work at their chosen location and sometimes pay for their own tools and resources. Contractors can also negotiate project or flat-fee payment structures.
It’s important to consider the financial and legal implications between permanent and contract employees as well. When hiring full-time employees, your business must withhold and deposit income tax, Social Security, and Medicare taxes from their wages. Your organization is also obligated to pay the matching employer portion of Social Security and Medicare taxes along with unemployment taxes on wages paid. None of these legal or tax implications are applicable to contractors as they operate under a separate business name, invoicing for their work.
Hiring tips for small businesses
Now that you understand the difference between a permanent and a contract employee, you’re ready to hire a new team member to grow your business. To help, we’ve outlined a step-by-step process for hiring a new employee.
1. Define the role
Take the time to think about your hiring needs. Clearly define the job title, outline responsibilities, and specify qualifications. Use that as the basis to write a job description that showcases your company’s mission, values, and personality. At this stage, you should also determine a salary range based on the current market.
2. Recruit candidates
Advertise your job opening in places where you can find the right candidates. Use a multi-strategy approach by promoting on job boards (such as LinkedIn, Monster, Indeed, GlassDoor, etc.), your company website, social media channels, and word of mouth. Don’t forget to tap into your personal and professional circle to ask for referrals.
3. Screen and interview candidates
Once the job post starts getting applicants, review resumes and select candidates that fit the description. If you get an overwhelming amount of profiles, create a screening process based on the job description, relevant skills, resume customization, and even spelling errors to narrow down the candidate interview list.
Start with a short telephone interview to determine if the candidate fits the job requirements. Think of initial questions you want to ask and, if applicable, give a short test or assessment.
Once the pre-screening phase has been completed, set up face-to-face or video call interviews. Prepare a list of questions so you conduct the same interview process, making it easier to compare candidates and their work. Make sure to include your staff in the interview process to get their input—including the hiring manager and a panel of team members who’ll be working with this role directly.
4. Narrow down your pool
Circle back with your team and identify 2–3 candidates that not only have the required experience and skill set but also the potential to add to your company culture.
5. Check background and references
Do your due diligence. Verify employment history and contact references such as previous supervisors and colleagues. Depending on your business, you might also want to conduct a background verification check.
6. Make an offer
Use the pay range you decided to select a salary that’s fair for the candidate’s level of experience. Once you make an offer, some candidates may accept it instantly, while others will want to negotiate their salary, bonus structure, and even time off. Don’t be turned off by this—you’re both trying to do what’s best for you. You’ll likely need to be flexible and understanding to attract, hire, and retain top talent.
7. Have an onboarding plan
Because every new hire requires a unique onboarding process, make sure you have a comprehensive program in place. Ensure the first day is smooth and organized with all the proper documents, training materials, and technology access. Having an effective onboarding plan makes new hires feel more welcome, comfortable, and part of the team—plus, it gives them the foundation of knowledge they’ll need to succeed in their new roles.
How to hire good employees
While having the right background and skills is important, don’t forget about company culture, attitude, personality, and overall fit. In addition to hard skills, pay attention to a candidate’s soft skills so you can make the best decision and ensure that your new hire is the right hire. Along with technical questions, throw in a few behavioral ones asking candidates to provide specific examples of handling tricky situations.
Making sure your business is ready to hire
Before starting the interviewing process, make sure you have all the basics in place adhering to the labor laws and industry regulations. Depending on your business size and stage, you may need to have the following taken care of:
- Applying for an EIN
- Knowing your business tax requirements
- Complying with legal requirements
- Having payroll processes in place
Growing your organization is a big step, and a wrong hire can negatively impact the team and your business in the long run. Use these hiring tips and take the time to think about your business needs so you can create a thoughtful job description, interview process, and onboarding program. That way, you’ll be able to attract the right people and set them up for success—which will in turn help your business thrive.
