Although often stereotyped as society’s fast-movers and risk takers, the majority of entrepreneurs admit they waited too long to hire their first employee, new research* from Paymentsense reveals.
Approaching nine in 10 SME owners (85%) said they should have moved more swiftly to bring in employee number one, with two-thirds (65%) reporting they should have hired three months earlier, and a further 16% thinking that they left it six months too late.
The top reason for this hesitancy to hire was nerves around management responsibility (63%), followed by being responsible for another person’s livelihood (21%) and fear of employing the wrong person (18%). Only 8% were put off by the prospect of paying a salary early on in the life of their business. The research showed that the average entrepreneur hires their first staff member after six-and-a-half months of trading.
Over a quarter (26%) made their first hire because of a significant new business win. This growth mindset was also reflected in the expertise they most needed to bring into the business at the time. More than a fifth (23%) said they hired to bring in more sales skills, 22% wanted operational support and 19% sought marketing support.
Small business leader and expert Carl Reader, said:
“From my own experience, and the experience of helping thousands of businesses, hiring the first employee is a step that takes any self employed person from owning a job to owning a business. In every business that I am now involved in, I plan for an employee to be recruited once the concept has been proven, but before customers are taken on board – so, within the first couple of months maximum. Entrepreneurs are great at coming up with big ideas, but ultimately they tend to become the bottleneck for the business if they don’t let go in the early days. Also, it’s always far more fulfilling to work as part of a team!”
Guy Moreve, CMO at Paymentsense said:
“Knowing when to hire your first employee is difficult for every business founder. It’s not a decision to be taken lightly, and clearly comes with an element of risk. However, it is also an essential step to realizing business growth, so it’s surprising to see that many entrepreneurs are delaying to make a decision.
“Considering that over half of new UK businesses don’t make it to five years of trading, every week, or even month of hesitation over that crucial first hire could have a huge impact on the growth of the enterprise. Our quick guide to hiring your first employee – is a great starting point for any SME owner looking to take the next step.”
Top reasons why entrepreneurs hesitate to hire their first employee
- Nervous about the management responsibility – 63%
- Nervous of being responsible for another person’s livelihood – 21%
- Nervous of hiring the wrong person – 18%
- Nervous about giving up responsibility to somebody else – 10%
- Didn’t want to start paying a salary too early on in the life of my business – 8%
- Put off by the extra administrative work it would entail – 5%
- Didn’t know where to start from or how to hire them – 2%