Clothing designer Bojana Sentaler is hiring her first employee.Michelle Siu/The Globe and Mail
Her business card says she's creative director at Sentaler Studio Ltd., a Toronto manufacturer and retailer of high-end alpaca coats. But Bojana Sentaler, the company's sole owner and designer, is also Sentaler's marketer, sales and customer service rep, event planner and blogger – just to name a few of the many hats she's been wearing since launching the company in 2009.
"In the past three years I've been pretty much doing everything – from designing and marketing events to client relations and business development," says Ms. Sentaler, who says her company's revenue has doubled year after year.
"But Sentaler has reached a point where it's growing so rapidly that I just won't be able to do everything any more."
With expansion plans that include e-commerce and sales in other retail outlets, Ms. Sentaler recently decided it was time to hire her first employees. She's now looking for an assistant and an outside sales representative.
"I feel both excited and anxious about bringing other people into the business," says Ms. Sentaler, who also started to outsource public relations earlier this year.
Making the jump from solo act to employer is a big step for entrepreneurs – and one they should not take lightly, say business and human resource experts.
"Getting your business to the point where you need to and are able to hire somebody, that's really something to be celebrated," says Dan Kelly, president and CEO of the Canadian Federation of Independent Business, a national organization that represents more than 109,000 businesses. "But it's also a decision that you need to make with a lot of careful thought and planning."
Becoming an employer means entering a web of red tape – something many small business owners don't expect, says Mr. Kelly. Among the many things on their must-do list, employers in Canada must set up a payroll account with Canada Revenue Agency and remit Canada Pension Plan contributions, employment insurance, and employee income tax.
They also need to make sure they're complying with workplace health and safety regulations, employment standards and other rules pertaining to workers' rights.
Legal employment documents, such as an employment contract or letter detailing the terms and conditions of employment, is essential, says Mr. Kelly; the old handshake that many small business owners rely on just won't do.
"You're entering a world filled with paper work, taxes, government inspections and compliance," says Mr. Kelly. "It's not for the faint of heart."
His advice to newbie employers?
"Make sure you have good advisers – for starters, a lawyer and an accountant," he says. "Business associations such as the CFIB or a local chamber of commerce can also be of significant help."
Beyond the paperwork and red tape, small businesses looking to hire their first employee must also face the challenge of finding the right person. Eileen Harper, principal and owner at TallSky Consulting Group Inc., an HR consulting firm in Victoria, B.C., says making the right hire starts with figuring out what position you need to fill – not a simple task for entrepreneurs who have been doing it all for years and must now decide what tasks they can safely pass on to someone else.
Ms. Harper suggests this exercise: think about your average week as a business owner and write down all the things you do in that average week. Then highlight all the tasks you'd like to delegate.
"Think what you would look for if, in a perfect world, you could hire the perfect person to carry out all these tasks," she says. "What would this person look like? What qualifications and experience would they bring to the table?"
In reality, most small businesses would probably have a hard time finding – and affording – their ideal first employee, says Ms. Harper. But going through this exercise will help them build a job description and list of qualifications.
Finding someone who has good chemistry with the business owner is critical, says Jenifer Bartman, a Winnipeg business adviser. But she cautions entrepreneurs against hiring people in their image.
"It's a classic mistake for entrepreneurs to hire somebody just like themselves," she says. "Instead of hiring someone who can diversify the skill set you have in your business, you've just hired someone who will duplicate what you do and focus on the same things you prefer to focus on."
Ms. Bartman says business owners should do an inventory of their skills and experience before they make their first hire. Ideally, they should bring in someone who will complement their skills and fill in knowledge gaps. For example, a business owner who's good in sales but poor in planning may want to hire an employee who's strong in strategy.
Kelly Fallis, founder and CEO of Toronto-based RemoteStylist.com – an online site where customers can get professional design advice and below-retail pricing on furniture – agrees. Two-and-a-half years ago, Ms. Fallis hired her first employee – a graphic and Web designer who "made everything look pretty."
"I had none of the skills that she had – I don't even know how to work Photoshop – so it worked out beautifully," she says. "The reality is I needed help in a lot of departments but I could only hire one person, not 20 employees, so I thought about which hire was going to take my business farthest and this was it."
Small businesses typically work on shoestring budgets, so they need to make sure their first hire will translate to improvements in their bottom line, says Ms. Bartman.
She says Ms. Sentaler has the idea of starting with an intern for the assistant position – a role that will be unpaid for the first three months but will turn into a salaried position once the new hire has been tried and tested.
Developing a compensation package for a first hire may require some creativity and flexibility on the part of the small business and the employee, says Ms. Harper. She's seen a number of entrepreneurs offering a share of the profit in lieu of a big paycheque.
"In some cases, especially when the entrepreneur is much older, they might even talk about passing on the business to the person they're hiring and making that part of the compensation agreement," says Ms. Harper.
As she gets ready to hire her first employees, Ms. Sentaler knows she'll need to make a few adjustments on her end. The first thing on her list: learning how to let go and delegate.
"It will definitely be a struggle because I'm so attached to the business and I know that many of my clients come because of me," she says. "But I always knew that this day would come, and it's what I need to do if I want my business to grow."