Today, we’re gonna talk about when you should consider hiring your first employee.
As a contractor, you’re saying to yourself: I need people! I need people to come work for me. I know I should hire, but this is kinda stressful. I’m not sure when I should hire my first employee.
I remember many years ago when I was in that situation; I knew I needed to hire, but I was stressed out. I thought… what if they’re stupid? What if I hire somebody and they get one over on me in the interview and they’re actually full of shit and incompetent? What if they quit on me right away? What if they make me look bad? What if I lose money? There’s so many things that go through our minds when we consider hiring our first employee.
Today I wanna talk about a few things that will help you identify when the time’s right to hire that first employee.
When NOT To Hire
Before that, I have two big reasons as to when you should NOT hire your first employee.
1. When you need them.
You do not ever want to hire somebody when you’re in a place of desperation. Let’s say you have a job starting in two days – so you run an ad, drive down to Home Depot and find the first person you see and say hey, come work for me!
The worst time to hire is when you’re in desperation mode. In desperation mode, you’re gonna take whatever you get and 10/10 times that’s gonna fuck you over. You do not wanna hire when you absolutely feel the NEED to hire.
2. If you don’t have a clear outcome for someone’s role.
Before you hire someone, you need to get your outcomes straight. On paper, you’ve thought it through, you know exactly what is required of them, and how you’re gonna measure them. Too many times, we hire people without a clear job description and that ends up biting us in the ass later on.
When You SHOULD Hire
So, let’s get into when you should hire your first employee.
1. Hire the money makers.
Right outta the gate, you gotta hire who you know will make you money. You have to be clear on the outcome you need and the problems you’re having in your business; it’s all about making sure you’re bringing people in that you know will make you money. It’s that simple.
If they’re in a sales role, that’s gonna add money into the business. If they’re in marketing, that’s gonna add money – because leads are coming in.
You also want to hire people to protect your money, like a good office manager and a good bookkeeper. People on the back end, people answering the phone. How does someone answering the phone make you money, you ask? Easy. Every time you miss the phone call, every time you don’t enter something into the CRM properly, it costs you money in the long run. If things are falling through the cracks and you are not able to sell because you’re doing marketing stuff or admin things, it might be time to hire that first employee.
You also want to hire when you know that employee is gonna produce something for a profit. If i’m hiring a guy to hang crown molding, then he needs to be able to do that in a proficient manner that leads to a profit.
2. Find someone who is an expert where you are not.
This is someone who has expertise in a certain area. They knock it out of the park. It might just be one thing – in fact, it’s better if it’s just one thing. If they do that one thing amazingly, then they’re gonna be worth it.
I’ve made the mistake of hiring guys in positions of ‘do-all roles.’ These are guys who do it all. The problem with this is that these guys don’t actually get GOOD at anything. They don’t bring in any sort of expertise, so I want to encourage you to find someone with a certain area of expertise – no matter what that area might be. Once you find them, it might be time to pull the trigger and have a conversation with them about joining your team.
3. When you are totally booked out
When your calendar is totally booked out and you can’t meet demand anymore, that’s costing you money. Tons of you are too damn scared to pull the trigger because you don’t wanna get burned. But listen – you’re gonna get burned. You’re gonna make the wrong hire sometime or another. But for me, I would much rather make a few wrong hires and learn from it than lose out on the hundreds of thousands (sometimes millions) of dollars of revenue coming into your business over the next few years.
Don’t be a chicken shit. When your calendar is booked 6-8 weeks out at a 50% gross profit or better, you have two options:
Number one: You could raise your prices. If the lead flow is that good then you might want to start charging a 70% gross profit so things will even out. That’s a viable option, and I know guys who do that.
Number two: This one, I prefer, because it gets me out of the day-to-day shit. Hire somebody to work with you and help with production. If you’re 6-8 weeks out and you’re a one-man show, you can’t do this alone forever. You’re getting older – you won’t always be young You just won’t. The last thing you want is to be married to a business where you have to work day in and day out to pay your bills and make a profit and you can never take any time off.
When you’re 6-8 weeks out at the profit margin you need, that’s when you need to consider bringing someone on.
But there’s a caveat – you don’t go and hire somebody the first time you’re booked out 6-8 weeks. in my world, once you’ve proven that you are booked out 6-8 weeks for at least 3-4 months, THEN it’s time to hire. Anyone can be a flash in the pan for 6-8 weeks during the busy season when demand is high. But after that period passes, you have to either let people go or stop paying yourself to keep paying them. Don’t put yourself in that situation.
You should only hire when you have a budget, and do your numbers, and you actually know what youre making and what it costs to run your business.
Don’t be afraid to hire, and don’t be a chicken shit. You’re gonna make mistakes. It’s just part of the game; it’s part of learning. But building a team is a wonderful thing. When you have the right people doing the right things and you are all rowing the boat in the same direction, I promise you that it will be worth it. If you’re on the fence right now, and you’ve known for a while that you should hire, run your situation through the things we talked about and you’ll know for sure when you need to pull the trigger and hire that first employee.