How do you know when you're ready to take on staff in your new business? Are you ever actually “ready” to take such a step? That's the basis of this episode, as our assembled panel of experts and business owners offer you their own tips and advice for taking on staff.

Whether you're a sole trader who needs an extra pair of hands for a few months, or the owner of a limited company looking to employ several people, the process is fairly similar across the board.

There's also the danger of putting off hiring staff because you don't think anyone can do the job as well as you. That might be true, but is this approach sustainable in the long term? What happens if you fall ill, or want to take a two week holiday abroad?

On this episode you'll hear from recruitment consultant Patricia McGuire, content marketing guru Chris Marr, photographer Julie Christie, employment law specialist Alison Colley, accountant Gordon Howes, and financial planner Pete Matthew.

Recommended Reading

There's a couple of excellent books on this subject that are worth checking out. The first is a classic called The E-Myth Revisited (Why most small businesses don't work, and what to do about it) by Michael E. Gerber. This one is primarily aimed at small business owners who are trying to do everything themselves.

The second is Virtual Freedom by Chris Ducker. Again it deals with the problem of trying to do it all yourself, but this one is a guide to hiring and managing virtual staff, rather than on-site employees.

Transcript

It becomes very apparent that you can't do everything and that's another piece of advice. Don't be a superhero. You cannot do everything.

I’m Colin Gray, and this is UK Business Startup, where this time, we’re talking people. Do you remember that quote from Chris Marr last time around?

Chris Marr: You need to pick out a time in the day where you are spending an hour or so working on your business. You need to have a plan for that. What are you doing every day to build your business?

This is one of the biggest mistakes new businesses make. They forget to think big. They forget to make time for planning, for strategy, for figuring out how to make the business a success. Instead, they just keep doing what they’re good at. The gardener keeps gardening, the programmer keeps programming, and the baker just bakes! The problem is, that’s not building a business. That’s building a job. And it’s a really terrible job at that. It relies on you to run, it relies on your time, so when you’re not baking, you’re not earning. That means no breaks, no holidays, no time to get sick! And it means no time to bring in more customers or grow a business. That’s what Chris from the Content Marketing Academy was talking about.

So, what’s the way out? Well, building a business that doesn’t just rely on you. That’s what. And that means staff. So, this is where it can get really scary.

Julie Christie: I have two employees. I didn't necessarily feel ready to do it. I just knew I had to do it. For two months, I couldn't afford it. I definitely took a hit because I was training her and I was sitting beside her all the time and we weren't taking on more work. Within two months, she was paying for herself. It was a very, very scary move to make but it was the right move and it allowed me to work on the business. I no longer was having to phone clients, go back and forth with anyone, design albums. All the admin was taken away from me so I was able to then do more shoots and more marketing to get more shoots.

That’s the bit that surprises most new business owners. The admin. There’s so much to do, from logging receipts, to paying tax, to handling bills. And that’s just the general stuff. There’s bound to be tonnes specific to your industry too. So, this is where a lot of people start, as you heard there from Julie Christie, the founder of TeaBreakTog.com. She’s still doing some of the main work – photography in her case – but he’s using the time that’s been freed up to do the marketing too. As Chris mentioned at the start, and even more in the last episode, that’s your big job as the founder. Marketing and growing your business. You can still do a bit of the technical work, but you need to find time for the high level stuff. Generally, that means staff.

So, how does it work when you’re starting out? Let’s look at Bill the gardener again.

Patricia McGuire: As a sole trader, Bill can take on a temporary member of staff. Certainly, Bill could advertise and take someone on just for a seasonal period of time so he could offer a seasonal contract to them which would be fixed, which means there's no obligation to keep them on after that or he could give something like a zero hour contract just to see how things go. If things work out well, he can tell the employee that he will increase the hours.

That’s the way in for a lot of people who start out working for themselves. They take someone on for the busy periods. No long term commitments, just getting a bit of help when it’s needed. It is a great way to build confidence and learn a few of the processes. And it gets you used to managing people – something most of us aren’t used to! So, once you make the decision, what’s our responsibility here with the tax office?

Chris Marr: He needs to inform the Inland Revenue that he's going to become an employer before he engages anyone. He will register for PAYE as an employer. He will receive his employer's PAYE reference as well as his Accounts Office reference.

This is easy enough, and it’s the same for a limited company. In fact limited companies tend to do this right off the bat! Either they’ll be taking on staff right away, like a café, or you want to get paid as the founder. Either way its’ really easy to register on the HMRC website – honestly, quick as anything.

Pete Matthew: One thing it's really important now is you've got to report to HM Revenue and Customs now when you pay your employees. You need to pay your employees on a certain day and that will need to be reported to the Revenue on that day, and any tax and national insurance due to the Revenue will need to be paid at the same time. That's called real-time information.

Okay, this might sound a bit complicated, but don’t worry, there’s technology out there to help. Remember on episode 2 when Pete was talking about managing your finances?

Pete Matthew: There are, again, software systems usually very often a part of the general accounting software systems that you can buy and they will do all that for you, so you'll need to register with the Revenue as an employer so that you can submit your real-time information, your payroll information as you go.

Both Pete and I have mentioned it before, but FreeAgent, is the one I’ve used in the past. It handles both invoicing and payroll, working out all of that stuff around tax and national insurance. There are plenty of other apps out there that can do it too. So, don’t let this part put you off – help exists!

Talking of which…

Julie Christie: When I decided to hire Fiona, I spoke an HR consultant who talked me through everything. He also put together a contract of employment and all the paperwork that we had to have in place and he advised me on insurance issues and things like that as well. That was all taken care of and then my bookkeeper, she took on payroll as well as keeping the books. It wasn't too bad at all and has been worth that's weight in gold.

We talked about bookkeeping and accountants in the finance episode, and Julie highlights it here. They can take on payroll for you, handling all of the fiddly work. And contracts – that’s a tricky one, and well worth getting some help with. You’ll find HR consultants all over the country, and you could get contracts and handbooks made up for just a few hundred pounds. In most cases, as Julie says, it’s worth every penny.

Ok, we’ve dealt with the prep. Everything you need to do to get set up as an employer. That’s a bit dry, but the next bit’s more exciting – that’s actually having them on board, getting the help, the input, the expertise they offer. Saying that, before we get too excited, I guess we need to think about what they want in return…

Pete Matthew: Paying staff isn't massively different whether you're in a limited company or you're sole trader. They are your employee and so you have certain responsibilities. A key one, of course, is paying them. They're not going to work for you very long if you don't pay, so that's a drain on cash flow. That needs to be planned in, always a good idea to have two or three months cash flow in reserve if at all possible, so you know you've got at least two or three months' worth of payroll that you can pay your staff so you're never sort of going right to the wire.

This ties into those questions at the start of the episode. When do you know you’re ready to take someone on? As Pete says, money plays a part. If the work dried up tomorrow, how long could you pay them for? Now, don’t let this scare you – it’s planning for the worst case. And with the help of someone else, it’s even less likely t