How to Hire Your First Employee

The good news is that your Utah business is booming. Despite the recession, you have managed to take a great idea and turn it into a profitable enterprise. The bad news is that you cannot run the whole company by yourself anymore, and making your first hire can be daunting. Do it right, and your business could skyrocket. Make the wrong choice and you could end up spending a lot of money on someone who does not help you at all. To make matters worse, you could end up having to pay for a costly severance and separation agreement if the hire does not work out.

So how do you navigate the transition from self-employed to employer? Start by asking yourself the following questions.

Is it the right time to hire?

Hiring an employee costs a lot more than using contractors or interns. Not only do you have to pay salary and benefits, but you will also be responsible for taxes, unemployment, workers compensation, holidays, vacation time and other expenses.

On that same note though, you can hurt your business by waiting too long to hire. At a certain point, you will miss out on opportunities to grow if you do not have help. You do not want to be stuck on day-to-day tasks when you should be focused on expanding your business.

Do you know how to choose the right person?

Your first employee will play a major role in your business. They need to be motivated, skilled and invested in your vision. They also need to be flexible and self-motivated - there's very little time for hand-holding in a start-up business.

Businesses often have the best luck finding employees if they ask their network for recommendations. Consult your board, former colleagues, mentors or trustworthy friends. Since they already know you and your business, they'll be able to recommend someone who is a good fit. After all, it's not enough for your employee to be smart - you have to actually like each other if you're going to succeed.

Have you taken steps to protect your business?

You need to make sure your rules and expectations are clearly communicated. Even if you only have one employee, you need to have an employee handbook. Establishing clear expectations can ward off unproductive behavior and provide guidelines if you need to terminate an underperforming employee.

You should also have your employee sign a non-compete, non-solicitation and non-disclosure agreement that will protect your trade secrets in the event your employee leaves the business.

Expanding your business is tricky and mistakes can be costly. Get the advice of an experienced business and employment law attorney who can help guide you through the process.

Source: Bloomberg Businessweek, "Before You Hire Your First Employee," Karen E. Klein, Nov. 18, 2011.