A MATTER OF PERSPECTIVE: 9/27/13

Making the First Hire

When is it time to expand?
AIE's first hire came two years after Ben and Jeremy joined forces. What led them to make the hiring decisions they did? How would they advise other start-up companies ready to expand?

Benjamin Wills

There have been three first-time, major commitment events in the AIE history so far. Hiring our first employee, renting our first office space and committing to a datacenter have all had the same feeling and questions in our minds. The most difficult decision so far was hiring the first employee into our business. The decision would double the commitment and paperwork involved in the business — at least in the AIE business owners’ minds.

This decision was made with fear and trepidation.

We all have read the studies pertaining to the fact that bad hires cost significantly more than just the lost salary. For one thing, we were hiring a person that would make our team 50% bigger. One of our clients also suggested that the first hire might potentially make more salary than we would. Personally, I did not want to hear that bit of business wisdom, but it is a real possibility if you are looking to hire the best fit to your team. 

We had a lot of questions in our mind as to what qualified for timing the first hire.

Could I work more and save the money?

Am I going to keep this person busy enough to cover his own salary?

What costs in management were going to be a surprise?

Does the person have the skills I need to cover the work problems I have?

And the list went on…

The first five hires will be your most important hires into the company. In the end, we hired Mark. While he did not fit all the skills and qualities I wanted, he brought skills and qualities to the team that I couldn't have predicted.

I believe there is a reason a business owner hears different opinions on what to prioritize in the first hire.

One opinion says to keep looking until you find the right skills and another opinion says to keep looking until you find the right person. There is a mix to the quest: Have a list of absolutely necessary skills and then hire the right “get it done” attitude with those skills. 

Hire the person that wants to find the work and get the business into a successful trajectory. We all are learning, so the other skills often can be learned much faster than an attitude change. 

__________________

Jeremy Wills

Unique to AIE, there were two of us from the get-go.

Our completely different skill sets allowed us to cover most of what was required to properly manage the business. This in turn allowed for quite a bit of time prior to our first hiring need.

Eventually, there were times when Ben in particular would become very busy. These times often birthed conversations about our need to hire, sometimes sparking tension between us. The question for many months would be about whether the desire to hire was out of a stress for the current work-load, or whether we truly sustained an amount of on-going business worthy of hiring our first employee. With each passing month, the answer became more clear.

We decided to hire a contractor initially. 

The decision wasn’t difficult, as the money wasn’t there to hire a full-time employee. We posted a couple of job ads on local church job boards in our town, and got responses that led us to bring on the first contractor. Unfortunately, I believe we were not careful in understanding market rates, and offered a per hour rate higher than the market would have paid. We became too judicious in using the contractor because the hourly rates posed a risk of eating straight through the profit. So, the relationship with him fizzled out soon. 

The next contractor relationship was a better fit.

During this time, a friend of mine mentioned his brother was in school for IT and thought he and I should connect. The timing was perfect. We invited his brother to a cup of coffee and a conversation about how it would look for him to work alongside us. We decided to commit to a set amount of hours and a fair market rate given his skill-set. This time around, it couldn’t have been a better fit. Business was picking up, and he was looking for work inside the IT field. Within one year, he went from 10 hours per week to a full time employee. Lesson ultimately learned?

Expand cautiously, but expand

I remember hearing somewhere early on in our business that the level of stress associated with hiring would not subside until after the 15th employee. This is simply due to the fact that capital is sparse and cash flow has significant implications in a young business’s decision making process. Therefore, we took the same hiring strategy with our second and third hires — initially onboarding them as contractors and eventually converting them to FTEs. Over time, our client base grew and our predictable income significantly grew as a result. This continued diversification of clients, along with a growing residual cash flow base, allowed us to make hiring decisions with much more confidence.

The best advice I can offer is to always be in the interviewing mode.

While all business ebbs and flows, there is a guarantee that every business whose doors are open will have a hiring need sooner or later. The more talent you are meeting, the easier and faster your decision becomes when it is time to pull the trigger.