September 14, 2018

Going from One to Two

Right now my little business is just too much for one person. I have a few people who help out here and there remotely. But I really need someone with me full time. I am ready to give up being "Mr Freedom" which is effectively "Mr Dawn till Midnight." (Though it has been great)

But its a huge leap to hire a staff member. Part of that is committing to someone, and big part is the expense because I am boot strapping. Another big part is that I will have to deal with salaries and taxes and HR issues which totally do not interest me. And I am trying to gain time not lose it.

Has anyone else done this? Is the best advice just "stop whinging and do it?"

  1. 4

    Been there.

    My advice would be to start by contracting for a few months. Low friction, easy to get set up and low risk on both sides. If it works out, you can transfer to a full-time employee position later.

    Also, hiring always comes with a short-term drop in productivity. You can minimise it to some extent by documenting what you're doing as a solo founder in a structured way, but there's no way of avoiding it completely.

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      Thanks thats good advice and its nice to know someone has been there. It seems everyone is solo or big, and you never really hear the details of how people get past solo.

  2. 3

    Depending on your jurisdiction, directly employing people can come with huge costs and social liabilities.

    Here in the UK, for example, you would need to:

    1. Register as an employer to get a payroll scheme number

    2. Pay Employer's National Insurance for the employee over and above whatever the agreed salary is

    3. Pay at least the statutory minimum wage

    4. Obey the constraints of the Working Hours Directive unless the employee chooses to opt out - their choice, not yours; this means they can only work for a maximum number of hours per week

    5. Factor in minimum statutory holiday (during which you continue to pay the employee's salary

    6. Have a valid insurance policy to cover the employee

    7. Prepare a payroll each month for the employee and pay over all employee taxes on behalf of the employee; you can choose to offload this to a payroll bureau - but that is additional expense so you have the choice of paying for the service or ensuring you are always abreast of ever-changing rules, regulations and rates

    8. There may be a legal requirement to establish a pension fund and you may be expected to contribute towards it as an employer even if it is only a default State pension fund; again, jurisdictions vary

    9. Prepare end of year employee payroll reports for the benefit of the Government

    10. If your employee is female, keep her job open throughout her statutory maternity leave if she chooses to have a baby (I think this is subject to the two year rule but I can't remember off hand)

    11. Provide a safe working environment, including any equipment they might need, even if they are physically working from their own home

    Additionally, once an employee has worked for you for two years, they acquire extra employee rights which make them extremely difficult to sack in the event of poor performance; you have to go through a long, formal process and, if you do not, you could be taken to an employment tribunal, prosecuted and find yourself having to pay compensation to the useless employee

    In general, most western European countries will have something like the above in place. Details will obviously differ but employee rights are relatively strong.

    I have no knowledge of employee practices elsewhere in the world other than knowing that most Europeans look at American "hire and fire" laws and are appalled at the lack of security employees appear to have there. I imagine there are parts of South America, Africa, the Indian sub-continent, Russia and South-east Asia where employment rights are similarly fragile.

    You would need to research your local laws but, in general, being an employer is more than just handing over a sum of money.

    A better answer might be to go through a temping agency. The hourly rate will appear high but, from that rate, the agency will be assuming all the responsibilities outlined above as well as taking its cut of the hourly charge. Better still, if you don't like the person they provide, you can ask for them to be pulled off the job. If you do like them, you just keep them for as long as you need them / can afford them.

    As @louisswiss mentioned, document your business processes (a good habvit anyway - what if something happens to you and you are temporarily / permanently incapacitated?) to make the transition for the worker as painless as possible and expect that it will take them a little while to learn the ropes. No-one can walk into an office and simply take over.

    With that in mind, be very clear what the scope of the role will be before you advertise and make sure you set aside sufficient time to give the worker proper, structured training. It will seem a pain at the beginning when you just want to get on but it will pay dividends in the long run.

    Final thought - and I have seen people struggle with this: when you scope the job, make it very clear as to what the boundaries of authority are within that job. In other words, you are delegating authority and you cannot do that if every decision has to be referred back to you.

    So, once you are happy that the worker is competent, agree their level of decision-making, run in parallel with them for a bit so you both learn how the other thinks then step back or you will have achieved nothing. That is probably the hardest thing to do and something which few people ever consider in advance. It makes for misery and dissatisfaction all round.

    1. 2

      Cor, thanks for the detailed reply. All of the buearocracy is definitely a turn off. I can't even spell it.

      In the last start up I was in I noticed that the very first hire they made was an office manager. And it was her job to handle all that HR paperwork, accounts and general admin as we hired more people. 1 founder and 1 staff doesn't carry the efficiency of 1 founder and 3+ staff.

      I am in Japan and its not a lot different to the UK in terms of worker security. Its also all in Japanese though.

      I will just think it over a bit I guess. Tough though it is I think it might be wise to wait till the MRR is a bit higher before taking the plunge.

      1. 1

        Wouldn't running abusiness be easy if it wasn't for the bloody customers and the bloody Government!