Thinking of starting a business, but not sure what you need to know? Begin your journey here with my basic guide to business start-ups. In my role as Editor for The Business Show and Business Startup, I have talked with literally thousands of business owners and entrepreneurs about what they really need to know, not what a business guru thinks they need to know. This series is the result. Today’s blog looks at recruiting and managing your first employee.
Becoming An Employer
Taking on your first employee is a real milestone for any start-up, demonstrating that the idea you have nurtured is growing. There are costs involved though, so make sure your business can support this additional expenditure – many business use part-time or freelance staff to bridge the gap.
Be clear on what you need an employee to deliver for your business before you even advertise. A job description will help you determine what help you need, as well as letting any applicants know what they’re applying for. Include information about pay, working hours, location and whether it’s a full-time or part-time job. Recruitment firms often charge up to 20% of a successful applicant’s first year’s pay, so many SMEs prefer to advertise on websites or via the job centre. Of course, it’s free to advertise vacancies on your own website.
Application forms make it easier to compare candidates like for like, but you’ll need to take the time to compile one. Asking for CVs might be quicker. Draw up a shortlist of suitable applications. Telephone interviews could save you a lot of time in face-to-face interviews, by screening out any unsuitable applicants. In either case, have a prepared set of questions covering their competencies, why they’re interested in the job and what they can bring to your business. You cannot discriminate in any way, based on age, race, sex or disability – you must judge each candidate solely on their suitability for the role. Remember to ask for proof that they are entitled to work in the UK, or you could be liable for a £10,000 fine. Finally, you might want to check their references from previous employers.
When you’ve decided who to appoint, call them in the first instance to make sure they’re still interested, then send an offer letter. Only advise other candidates they have been unsuccessful when your first choice – or second, or third – has agreed to start. As soon as you have made this agreement, then a contract is in place, but you’re obliged by law to give them a written statement of employment particulars within the first two months of starting work. This should cover their job description, salary, hours, holiday entitlement, notice period and other terms and conditions.
You’ll need to register as an employer with HMRC and you must make National Insurance and tax contributions through PAYE. You’ll soon have to make pension contributions for them, too. You’ll also need to decide how you’re going to pay staff – by cheque, bank transfer or cash. Your accountant can help you with these decisions and even take care of payroll on an ongoing basis. You should make sure that any health and safety arrangements are up to date and that you’ve carried out a risk assessment for the duties that your new member of staff will undertake. You’re also obliged by law to have at least £5 million Employers’ Liability cover, in case an employee sues you if they are injured at work.
Before your new recruit starts work, you’ll need to make sure they have the tools to do their job, be that a desk and computer, vehicle or other equipment. It’s common to have a probationary period to help you make sure you’ve hired the right person. During this time, you can usually end their employment with one week’s notice if they don’t match your expectations for any reason.
Give your employee objectives and monitor whether they meet them. This will both give them some guidance as to what you expect, as well as give you a framework to assess their work. Be clear and specific in any briefing you give, what you expect from them, and offer regular feedback on their performance. Bonus or commission can be a good motivator, but above all else, make sure you pay them in full, and on time. They won’t care about cashflow or outstanding invoices; they need their salary when they expect it to pay the rent or mortgage. There’s a reason they’re an employee and not an entrepreneur and if they don’t get their regular pay, your new employee will be looking for a new employer…
If you find the series – or any of the articles in it – useful, please share them via LinkedIn, Facebook, Twitter, or your own blog. I’d really appreciate it, thanks. If you need professional copywriting for anything from your first business plan to marketing collateral and press releases, I’d love to hear from you. Get in touch today to find out how I could help your business.