How to Hire the Right Employees

In their book Start Your Own Business, the Staff of Entrepreneur Media Inc. guides you through the critical steps to starting your business, then supports you in surviving the first three years as a business owner. In this edited excerpt, the authors offer tips on finding the right employees for your new business.

The employees you hire can make or break your business. While you may be tempted to hire the first person who walks in the door “just to get it over with,” doing so can be a fatal error. A small company can’t afford to carry dead wood on staff, so start smart by taking time to figure out your staffing needs before you even begin looking for job candidates.

Begin by understanding the requirements of the job being filled. What kind of personality, experience, and education are needed? To determine these attributes, sit down and do a job analysis covering the following areas:

  • The physical/mental tasks involved (ranging from judging, planning, and managing to cleaning, lifting, and welding)
  • How the job will be done (the methods and equipment used)
  • The reason the job exists (including an explanation of job goals and how they relate to other positions in the company)
  • The qualifications needed (training, knowledge, skills, and personality traits)

If you’re having trouble, one good way to get information for a job analysis is to talk to employees and supervisors at other companies that have similar positions.

Next comes the job description. This is basically an outline of how the job fits into the company. It should point out in broad terms the job’s goals, responsibilities, and duties. First, write down the job title and whom that person will report to. Next, develop a job statement or summary describing the position’s major and minor duties. Finally, define how the job relates to other positions in the company. Which are subordinate and which are of equal responsibility and authority?

For a one-person business hiring its first employee, these steps may seem unnecessary, but remember, you are laying the foundation for your personnel policy, which will be essential as your company grows. Keeping detailed records from the time you hire your first employee will make things a lot easier when you hire your 50th.

The job specification describes the personal requirements you expect from the employee. Like the job description, it includes the job title, whom the person reports to, and a summary of the position. However, it also lists any educational requirements, desired experience, and specialized skills or knowledge required. Include salary range and benefits. Finish by listing any physical or other special requirements associated with the job, as well as any occupational hazards.

Writing the job description and job specifications will also help you determine whether you need a part- or full-time employee, whether the person should be permanent or temporary, and whether you could use an independent contractor to fill the position (more on all these options later).

Writing the ad

Use the job specification and description to write an ad that will attract candidates to your company. The best way to avoid wasting time on interviews with people who do not meet your needs is to write an ad that will lure qualified candidates and discourage others. Consider this example:

Interior designer seeks inside/outside salesperson. Flooring, drapes (extensive measuring), furniture, etc. In-home consultations. Excellent salary and commission. PREVIOUS EXPERIENCE A NECESSITY. San Francisco Bay Area. Send resume to G. Green at P.O. Box 5409, San Francisco, CA 90842.

This job description is designed to attract a flexible salesperson and eliminate those who lack the confidence to work on commission. The advertiser asks for expertise in “extensive measuring,” the skill he has had the most difficulty finding. The job location should be included to weed out applicants who don’t live in the area or aren’t willing to commute or relocate. Finally, the capitalized “PREVIOUS EXPERIENCE A NECESSITY” underscores that he will hire only candidates with previous experience.

To write a similarly targeted ad for your business, look at your job specifications and pull out the top four or five skills that are most essential to the job. Don’t, however, list requirements other than educational or experience-related ones in the ad. Nor should you request specific personality traits (such as outgoing, detail-oriented) since people are likely to come in and imitate those characteristics when they don’t really possess them. Instead, you should focus on telling the applicants about the excitement and challenge of the job, the salary, what they will get out of it, and what it will be like working for you.

Finally, specify how applicants should contact you.

Recruiting employees

The obvious first choice for recruiting employees is the classified ad section of your local newspaper, both in the printed and online versions. Place your ad in the Sunday or weekend edition of the largest-circulation local papers.

Beyond this, however, there are plenty of other places to recruit good employees. Here are some ideas:

Tap into your personal and professional network. Tell everyone you know—friends, neighbors, professional associates, customers, vendors, colleagues from associations—that you have a job opening. Someone might know of the perfect candidate.

Contact school placement offices. List your openings with trade and vocational schools, colleges, and universities. Check with your local school board to see if high schools in your area have job training and placement programs.

Post notices at senior citizen centers. Retirees who need extra income or a productive way to fill their time can make excellent employees.

Use an employment agency. Private and government-sponsored agencies can help with locating and screening applicants. Often their fees are more than justified by the amount of time and money you save.

List your opening with an appropriate job bank. Many professional associations have job banks for their members. Contact groups related to your industry, even if they are outside your local area, and ask them to alert their members to your staffing needs.

Use industry publications. Trade association newsletters and industry publications often have classified ad sections where members can advertise job openings. This is a very effective way to attract skilled people in your industry.

Go online. There are a variety of online job banks and databases that allow employers to list openings. These databases can be searched by potential employees from all over the country. And don’t forget LinkedIn, an international professional networking site, where you can post jobs and find candidates through the site’s automated talent matching system.

Easy Accounting Tips For Small Businesses

We have the smartest and most clever accountant in the world. So we asked him to give us some accounting tips for small businesses just starting out. Here’s what he wrote. It’s solid advice from an accountant who saves us tons of money. If you want a referal to our personal accountant just let me know in the comments.

Accounting Tips

  • KISS. Keep it simple starting out. The simplest form of entity for running your first business is called a sole proprietorship. This form of ownership requires NO special communication or filings to the Internal Revenue Service until you start paying employees.
  • As a sole proprietor you are the owner/entity which might require only to acquire an occupational license if your county or municipality mandates one. As the owner, you are also liable to remit all state or city tax collections on retail or wholesale sales your business collects. Service businesses and most cross state sales are exempt from state tax collections.
  • If you are concerned about personal liability as a sole proprietorship then do the cheapest and simplest thing which is to buy a personal liability umbrella policy. The best way to avoid liability is to learn your trade well and keep accurate records on LessAccounting.
  • Concentrate on building your business not communicating with the IRS. As a sole proprietor, the IRS will not even know you exsist until after you file your first personal income tax return. This return will include a Schedule C which communicates all of the sales and expenses you recorded in LessAccounting on your business. These sales and expenses do not have to be in a separate bank account as mandated by the LLC or Incorporation format. The sole proprietor losses offset your day job’s income to provide a possible tax refund.
  • Over 90% of small businesses fail or change ownership within the first five years. Plan your business to thrive but if it fails under a sole proprietor you simply stop doing business. No communication or special forms with the IRS, no additional taxes to get your investment returned and no high accounting fees to close out your entity. Simply file a final Schedule C with your next personal return. KISS.
  • How do you get paid as a sole proprietorship? Simply take the money out as a draw. No payroll taxes or quarterly forms needed. Most startups lose money for the first several years, so keep your day job to pay your living expenses.
  • Know that a “write off” doesn’t mean that expenses is free, it only means you can save paying some taxes on that income if you spend it for certain purposes. Small Business Tax Tips… What You Can And Cannot Deduct.
  • After you pass the five year hurdle, then you can talk with a CPA about another entity type that might save you taxes. Again a simple bookkeeping entry transfers all of the business assets from the sole proprietorship into the new entity without any tax penalties. Then quit your day job to celebrate your new livelyhood.

General Small Business Tips And Advice