It’s a point that many independent entrepreneurs come to as their businesses grow: whether to hire or not. Should they find an employee to take on work that’s beyond their capacity or outside their skill set?
For Scott Brookfield, chief executive officer and chairman of Blackline Management Group Ltd. in Halifax, the decision was a no-brainer.
Mr. Brookfield, a chartered accountant, left a position in 2003 as a partner at Deloitte & Touche to start Blackline, a venture capital and management company focused on the construction sector. One year later, he was still solo but looking “to build a business around me.”
To do this, he needed help. The first staff member would be a full-time superintendent of residential construction, especially as Mr. Brookfield had no experience in that critical area.
But hiring his inaugural employee wasn’t a task he took on lightly or found easy to do. Where to find the right person for the job? Someone with whom he would be compatible? And how would he pay for the salary and benefits, as the company was not yet generating enough income to cover such costs?
Mr. Brookfield asked around and zeroed in on Karel Solnicka, who came highly recommended by clients and homeowners living in new houses he’d built. He was also someone Mr. Brookfield felt he could work well with.
In a leap of faith, the entrepreneur dipped into his own pocket for much of the cash to carry the additional cost for a while, confident that the investment would pay off. He also structured the hire as a subcontract, providing some flexibility should things not work out.
The process is one that many small business owners find themselves going through as their companies evolve, says Ted Mallett, vice-president and chief economist of the Canadian Federation of Independent Business.
“It’s a pretty big step,” he says. “The owner is no longer going to be the chief cook and bottle washer.”
Indeed, job descriptions are the first order of business, Mr. Mallett suggests, not just for the prospective employee but for the boss as well. Another upfront decision is whether to bring in a raw recruit, who’ll need monitoring and training but comes more cheaply and can be shaped according to your needs, or an experienced person who costs more and may be set in his or her ways but can probably hit the ground running.
Be confident that the revenue stream can or will support the salary, benefits and other costs, and don’t underestimate the administrative obligations involved in managing an employee, Mr. Mallett cautions. “You’re the HR department.”
Indeed, many businesses don’t ever go beyond one employee, he adds. According to the Statistics Canada Labour Force Survey for the first quarter of 2012, 2.6 million people are self-employed in Canada and 1.8 million of them have no employees.
A first hire is “a very scary decision” for business owners, Mr. Brookfield says. “They work hard to pay themselves something, and now they have to take the jump into hiring an employee, who won’t do things the way they do them. And they have to have enough work for two people instead of one.”
An alternative to hiring, especially if you’re looking to cover a variety of tasks – such as bookkeeping, sales, legal advice, marketing help or engineering – is to contract out.
One of Blackline’s specialties is providing independent accounting services, with a handful of staff who can work part-time in small businesses, in capacities from bookkeepers to VPs of finance. “It’s a way for companies to hire talent without having to make that commitment,” Mr. Brookfield says. “You can make sure that you get all of the skill sets you need.”
Most small business owners first hire people to work on their finances, either because their own time is better spent doing something else, such as soliciting clients, or because they’re simply tired of doing it and can afford to pay for help, says Peter Conrod, vice-president of client and business strategies for Royal Bank of Canada.
Experts can be brought in part time to assist with specialty areas such as exporting or raising capital, he says, recommending that people be hired first on contract, “as an audition.”
Hiring a permanent staffer allows the entrepreneur to spend more time out of the workplace or even take a vacation, and can provide valuable feedback and input from the inside. “They’re seeing your business from a different perspective,” Mr. Conrod says.
Today Blackline has more than 400 employees, who work in a series of companies it has started or acquired. These include the accounting business and Grande Coastal Homes, which is involved in home construction and renovation. There are also firms that make and install flooring and that provide mobile cranes.
Mr. Solnicka still works for Blackline, as the general manager of Grande Coastal Homes, proving the value of his initial hiring. “He’s loyal, dependable and knowledgeable in his trade, and the right man for the job,” Mr. Brookfield says. “It couldn’t have worked out better.”
Tips for hiring your first employee
It can be scary for entrepreneurs to start hiring, Mr. Brookfield says. Here are his tips:
Where to look: Finding the right person for the job begins with advertising and checking résumés and references, but objective recommendations by “someone you know and trust” are critical. “There aren’t too many bad references ever given,” Mr. Brookfield comments. “There’s nothing like finding someone who’s highly recommended and then feeling that connection.”
Whom to look for: While it’s important to have employees who are in sync with you, in a small business it’s also good if they complement your talents, expertise and even temperament. “You want people to think on their own feet and do things their way,” he explains. “It’s good to have someone who has a different personality and a different context than you; it makes you stronger.”
Consider all the costs: There are lots of extras involved in hiring, Mr. Brookfield notes. On top of salary, the price of benefits “can really surprise you,” not to mention government fees, EI and CPP contributions, pension arrangements as well as workspace and equipment. “It adds up.”
Hire gradually: Contracting or subcontracting that first employee “gives you a little more flexibility,” he says. But be careful to follow the rules, and ensure you don’t lose someone who’s great after two weeks to a full-out hire.