Entrepreneurs wanting to increase the scale of their business usually do so through recruitment (Glancey et. al., 1998). The decision to grow the business and hire new employees can be a difficult one to make. Not only are there financial constraints, but small business owners need to be able to hire effectively in order to have continued success in their business. The decision to hire can be risky and costly however, if done wisely a new employee can be both profitable and valuable.
2.0 Small Business Ownership
In their article, Quinn et. al. (1992) stated that people are motivated become small business owners due to lack of interest in their previous jobs, fulfilling their dreams or family inheritance of the business. For what ever reason an entrepreneur decides to start their own venture, their business concept most often tends to be highly specialized and based on their core competence. This is especially for true for the foodservice and catering industry. Success for most business owners in this industry stems not only from their talents and ability to produce high quality products, but also their ability to maintain close relationships with their clients.
Carrie Wong like other small business owners and entrepreneurs has followed a pattern of starting with a good business idea, making it successful and then expanding it (Han, 2004). Her motivating factor for starting the business was losing her corporate job in marketing. Carrie was the sole entity of Practical Gourmet for two years, managing to successfully market and manage all aspects the business on her own.
3.0 Deciding When to Expand
For many small business owners the most common reason for expansion is profitability; however there are also “push” and “pull” factors involved (Glancey et. al., 1998). High demand and market expansion was the “push” factor for Practical Gourmet. Although many entrepreneurs are regarded as “jacks of all trades”, there comes a time when the business becomes simply to much for one person to handle.
Growth of some sort is essential to the sustainability of every business. An entrepreneur must have the capability to focus on their talents and core competencies in order to maintain the essence of the venture. As the business grows they must hire other skilled people that can complement their talents and take care of other aspects of the business. The first step in knowing that it is time to hire a new member is determining that there is enough product demand to justify the decision (Quinn et. al., 1992) and (Stines & Kliner, 2003). A second indication of needing help is if the owner is overwhelmed by tasks and finds that they are letting things “slip” (Wahlgren, 2004). Thirdly, customer dissatisfaction is a telltale sign that improvements need to be made.
Contrarily, most entrepreneurs have a high level of affiliation with their business including established relationships with their clients and quality assurance by making the products themselves. The owner’s involvement in these aspects of the business can be significantly reduced as the business grows. This can pose as a great risk in profits to the business. However, waiting for too long a period to hire someone can also be detrimental to the business. If these risks are properly calculated and the growth strategy is planned, the results can be very rewarding.
4.0 Other Considerations Before Hiring a New Employee
It can be very costly to take on a new member. There are many aspects of hiring an employee that require careful consideration. This can include issues such as: uniforms, compensation, training, laws applying to employment, safety regulations, salaries and wages, paperwork, etc. According to Stines & Kleiner (2003), the small business owner is at a disadvantage… if the owner does not do his homework up front, the hiring of an employee can be a very expensive learning experience. Therefore, it is important that the employer decide what competencies the new employee must have and match them to the job requirements.
Entrepreneurs must be very resourceful and innovative in order to reserve their resources and increase their output (Han, 2004). They can therefore look at other alternative means to hiring an employee. The business owner should use their creativity to determine how to use any “free” help available (Stines & Kleiner, 2003). This can include finding voluntary workers or creating a partnership and sharing the workload. Finding new ways of doing business in an efficient manner is a key success factor for all enterprises.
5.0 Finding the Right Candidate
Carrie decided that it was time to hire her first employee in order to be able to manage the growth and work on expanding the enterprise. She had many concerns about her decision such as finding the right person for the job. This is an anxiety for many entrepreneurs upon hiring their first employee, as many do not have formal management training nor do they possess formal hiring practices. Small business owners need to be wary when selecting a candidate and always plan ahead.
The first consideration when choosing the appropriate candidate, is knowing what type of help is required and how often it will be needed. There are other options as opposed to employing a full or part-time person for the job. According to Stines & Kleiner (2003), if the needs of the company are more flexible then they may consider using a contractor or freelancer or if the needs are temporary then they can consider using a temporary help service. In all of these cases, the owner must think about what the means of compensation will be and more importantly, if that person will add value to the company.
A major concern for most small business owners including Carrie is will the person hired have as much vested interest in the business as they do. In The First Employee, Donna Kelley stated that the first priority should not be a particular skill, but a point of view (Wahlgren, 2004). Finding someone who shares the same passion for the business as the owner does is very important.
Borgman (1973) stated that, “While the small company does not necessarily have to pay the top wage, it must recruit aggressively and capitalize on its strong points to secure a share of the best talent available.” If they do not employ this practice, they face being left with unqualified people or people that may produce poor quality work. This is especially important for highly skilled positions. A business owner must remember that people can be trained and that there are other important qualities that one should look for in a potential candidate. Some of these qualities are reliability, integrity, the ability to adapt to change and learn quickly. An employer might consider all or some of these important for an employee to possess in order to be an asset.
6.0 Keeping Good Employees
Retaining talented employees can be a challenge for small business ventures, as finances are usually a constraint. Many small business owners are not able to provide high wages, salaries or benefits to their staff members. Therefore, it is easier for their employees to be stolen by the larger corporations or the competition. There are many things a business owner can so to keep their employees satisfied with their jobs. Providing a positive and safe working environment helps the employee to feel comfortable and enjoy coming to work. Giving away small perks such as free vouchers to the movies or dinner once in a while is like giving them a small reward. Once Carrie found a good candidate to fill the position, she offered him a share in the profits after two years. She recognized the importance of rewarding him beyond his standard pay and gave him a chance to benefit from the growth of the business as a result of his contributions.
It is also important for small business owners to realize the potential of their employees. This can be an advantage to their company if they capitalize on these assets. Borgman, (1973) suggests that by giving the employee a greater chance for involvement in the company, more responsibility and growth opportunities they will in turn invest more interest in the success of the company.
7.0 Conclusion
An entrepreneurs’ decision to hire their first employee can be frightening. It can be very risky and costly; therefore the employer must do their research and make an informed decision. If the correct practices and plans are employed, then the process should be less intimidating and more rewarding. The small business owner must consider when and whom to hire in order to make an informed decision. Timing is an important factor because the owner must have the financial means to hire and have the product demand to justify the need for a new member. The right person is also critical because it can be costly for small businesses to go through the hiring process. Losing a valuable employee is like losing an asset and can also have a damaging affect on the company. Therefore, it is important to offer adequate compensation or affiliation to the company for the employee.
REFERENCES
Borgman, R. 1973. Winning the recruiting battle in small business. Journal of Small Business Management. 11:22-26.
Glancey, K., Greig, M., & Pettigrew, M. 1998. Entrepreneurial dynamics in small business service firms. Internationl Journal of Entrepreneurial Behaviour & Research, 4(3):249-260.
Han, M. 2004. Lecture. January 9.
Kuratko, D., Hornsby, J., & Naffziger, D. 1997. An examination of owners’ goals in sustaining entrepreneurship. Journal of Small Business Management. 35(1):25-30.
Miner, J. 1973. Personnel strategies in the small business organization. Journal of Small Business Management, 11:13-16.
Quinn, U., Larmour, R., & McQuillan, N. 1992. The small firm in the hospitality industry. International Journal of Contemporary Hospitality Management. 4(1):11-15.
Robinson Jr., R., Pearce II, J., Vozikis, G., & Mescon, T. 1984. The relationship between stage of development and small firm planning and performance. Journal of Small Business Management, 22(000002):45-52.
Stines, S. & Kleiner, B. 2003. Keys to hiring employees effectively in a small business. Management Research News. 26(2-4):170-181.
Wahlgren, E. 2004. Getting started: the first employee. Inc. 26(2):30-31.
