How do you know when it's time to hire your first employee?

So your home business is booming. You're inundated with orders, enquiries, new leads. In fact, you could be doing so well that you're thinking it might be a good idea to stop relying on friends and family to do the odd job for you here and there, but take on your first employee. For any small business, knowing when the time is right to take on an extra pair of hands is a big decision which shouldn't be taken lightly. After all, you will be responsible for their welfare - from making sure they are paid, to covering yourself should things go wrong - to their happiness, their development, their training...

With that in mind, engagement survey provider ETS has come up with five simple tell-tale signs for you to think about if you're considering making the leap and taking someone on.

#1 - Business success...or failure

Perhaps the biggest tell-tale sign you need to take someone on is a booming business. If you are finding that there just aren't enough hours in the day for you to fulfill orders or provide a service then it's a clear signal you need to get some help. On the other hand, if you're starting to let people down and orders are falling through the cracks or you're getting lots of complaints it's a warning that you need an extra pair of hands.

#2 - Delegation

You know your business ins-and-outs better than anyone else - so you are in the best position to work out which tasks could be assigned easily to someone else. You don't want to be giving away more responsibility than is necessary when you hire your first person, so identify the daily tasks which take time but are easy to do. Perhaps it's packing orders and posting, or someone to maintain and manage your company website. Whatever it is, make sure you draw up a job specification with the skillsets you think it needs. Is it a job which can be done part-time, or does it need full-time attention? Do your research and see what the going rate is though, you don't want to be paying too much, or indeed too little!

#3 - Look at your cash flow

You may want to bring on another pair of hands, but can you actually afford it? You don't want to bring someone in and then find out you can't actually afford to pay their salary. There are lots of hidden costs involved with hiring an employee - like insurance and tax. Look at your books and really analyse your cash flow. If you are confident that you can make the payments each month without having to eat into your profits (or even worse your savings) then get that advert drafted!

#4 - Understand employment law and taxes!

Employment law and the tax system is notoriously complex, so you do you know what you need to do? When you advertise for a candidate it must not be discriminatory. The contract of employment you offer is a contract like any other and you are obliged to fulfil your obligations else you could be faced with a claim for breach of contract. You also need to know how to pay your employee for the first time - and that includes calculating and setting up your own payroll. Her Majesty's Revenue and Customs has an online tool which guides you through the process so you can pay your employee whilst complying with your legal obligations.

Why not check out Business Link has a great help section for what you need to do if you want to take on your first employee.

#5 - Have you got the space?

Finally, have you actually got space for them to work? If you are a home business, you will be sharing your private space with a stranger, so it's critical that you establish boundaries from the beginning. Where can they go? Can they use your kitchen? Can they answer your home phone? It's likely that your employee will be just as concerned about overstepping a boundary as you might be, so setting up guidelines up front can help ease the transition and make them more comfortable too. If you don't feel up to sharing your home with your employee you have two options - hire independent contractors to do the work instead, or look for business space outside of your home.

So there you have it, five simple things you need to think about if you're considering hiring an employee to help your business. Remember that advertising for staff is incredibly expensive - local papers charge more for job adverts than any other advertising. Recruitment agencies could ask for up to 20% of an employee's first year salary to find the right person for you. If you want to avoid laying out any cash you can scour specialist social media sites for businesses, such as LinkedIn, and track down potential employees that way.

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Hiring your first employee is the next step in your business evolution. Good luck!