A few months after opening the first Wine and Design painting studio in Raleigh in 2010, N.C., Harriet Mills and her business partner knew that they were ready to franchise the business. But they found themselves too busy running the location to be able to work on the business of expansion. Sales grew 38 percent last year and are on pace to increase another 50 percent or so this year.
“I knew it was time to hire someone else when I couldn’t get to everyone and everything and all of the emails,” Mills says.
She and her business partner decided to hire someone to manage the store so they could focus on the franchise business. They gave the job to a graduating college student who had impressed them during an internship with the company.
It was a smart move. Without having to worry about the day-to-day tasks of running the store, Mills and her business partner were able to grow their business quickly. Five years later, the company now has four full-time employees in the corporate office and 55 locations across the country.
Hiring the right team from the start is one of the most important moves that a startup can make. Decisions you make now will impact the company’s ability to succeed and continue growing, and they’ll serve as a precedent for future hires. And a bad move will cost you: A recent CareerBuilder survey found that bad hires could cost companies $50,000 or more in lost revenue, productivity challenges and employee morale.
Follow these steps to get your hiring started on the right foot:
A lot of startup needs can be met with the use of freelancers, and functions like accounting or human resources are often best outsourced in the early years. Temps and interns are also a great source of help without making a long-term commitment.
Instead, focus your first hire in the areas that you feel are essential to maintaining business momentum or are required in order to keep up quality standards. Depending on your business, that could be anyone from a location manager to a salesperson.
While you’ll need a specific job description that includes required skills, it’s worth keeping in mind that in most small businesses, especially those just starting to grow, most employees wear multiple hats, so you’ll want someone who is OK with that.
In many cases, that means hiring folks who have experience working for a small business in the past, even if it’s not in your exact industry. “For an organization that’s just starting out, hiring someone who can pitch in and do different things is critical,” says Maynard Brusman, a San Francisco-based psychologist and owner of consulting firm Working Resources. “Later on, you can have a job that’s more defined.”
Even if a candidate looks great on paper, small businesses especially have to be aware of how each hire will fit into the company culture. For startups, the first hires will also play a role in shaping and defining that culture, Brusman says.
While a diversity of opinions and backgrounds is important to a business, so is harmony among employees. If your gut is telling you that a potential employee just won’t fit in, or has a value system that won’t mesh with your company’s, listen to it.
In order to attract the best talent, you’re going to need to offer a competitive compensation package. Use Glassdoor.com or PaysScale.com to get a sense of what’s typical for your industry in your area or work with a recruiter to figure out what you need to be paying. If your budget’s tight, sweeten the deal by offering flexibility, performance incentives or consider offering equity.
Once you’ve set compensation levels, revisit them periodically to make sure that you’re remaining competitive, both to attract new employees and to retain the ones you already have.
Posting your job on big job boards like Monster.com or CareerBuilder.com may get you an overwhelming number of underqualified candidates. Instead, try a more targeted approach by posting the job on industry-specific job boards and sharing it with your network.
Working with the career services site at your local college can be another way to attract smart local talent.
Making a poor hiring decision can be a long-term and expensive problem for your company, so you’ll want to do due diligence on anyone you’re seriously thinking about bringing on board. A recent report by HireRight LLC, a provider of employment background checks, found a 27 percent discrepancy rate in applicants’ employment histories.
Follow up with any references that applicants supply and run a thorough background check on them to ensure there are no skeletons that could pose a problem down the road.