Once the entrepreneur obtains the needed finances to start his/her new business,
s/he can now begin to hire employees. Hiring employees for a new business can be
quite a difficult task since it requires the same amount of time and dedication
as developing the business proposal and the process of raising capital. However,
before recruiting anyone into the new business, the entrepreneur needs to understand
the hiring process:
1. Determine the number of employees needed
The first step in hiring staff for a
new business is determining the number of employees
that are needed. This is crucial for a company since each staff member requires
a salary, benefits, and employer liability. The entrepreneur also needs to decide
on the qualification requirements for different positions within the company. The
new business owner also needs to make sure that the new hire(s) has/have the necessary
educational qualifications and matches the working style required for the new company.
Working for a start-up company requires a lot of hard work and can be very challenging;
therefore, the entrepreneur needs to find people who share the vision and are committed
to the work.
2. Advertising a Job Opening
A new business owner who is interested in hiring new employees must use all available
resources in recruiting the best possible candidate. By placing job postings in
the local paper and on numerous online web-based job sites, the employer can definitely
increase the pool of qualified applicants. They can even attend job fairs to recruit
potential candidates. In order to assess which candidate qualifies most for a particular
job, the new business owner must meticulously compile a list of requirements in
an employment ad, including education and work experience. The most qualified candidates
should be invited to get interviewed.
3. The legal obligations in hiring
There are no mandatory legal requirements in posting an employment ad; however,
new business owner must abide by several state and federal guidelines in order
to avoid unfair hiring practices. For example, The Equal Employment Opportunity
Act prohibits discrimination in the workforce against race, gender, age, religion,
sex, and disability. The Fair Credit Reporting Act states that an employer must
obtain written consent by the applicant before a credit check can be administered.
The Bankruptcy Act prohibits the discrimination of employees who have applied for
bankruptcy. The employer must become familiar with all of these acts when conducting
a prospective candidate’s background check in order to avoid legal problems and
4. Due diligence by checking references
Often times, employers will ask the job applicant to provide at least three sources
of references. These references are a vital tool in determining if the applicant
is qualified for the job. By failing to conduct a thorough background and reference
check on each candidate, the business will not only be at risk for negligent hiring
but it may also create some form of legal liability when violent or serious acts
are committed by the employee in the workforce.
In addition, negligent hiring can lead to high employee turnover, increased office
absenteeism, and eventually, poor company reputation. In order to avoid such problems,
employers must always check references, as well as verify the educational background
and job experience of the applicant. Checking a prospective applicant’s references
also allows the employer to directly speak to a candidate’s past and/or present
supervisor in order to validate any information that is presented and to better
determine if they are qualified for the job.
If the employer does not have the resources to prescreen an applicant, they can
utilize many of the available pre-employment screening services when recruiting
a new hire. These services conduct a background check and a social security check
on the potential applicant. Unlike business practices in the past, an
cannot undertake the prescreening process without written permission from the potential
5. Consider the cost of hiring a new employee
Nowadays, it costs money to recruit, hire, and train employees. A recent study revealed
that on average, companies spend at least $4,000 during the hiring process. This
amount takes into consideration the time spent on developing a job description,
advertising the job opening on and offline, responding to resumes, conducting telephone
interviews, performing in-person meetings, and the administrative paperwork in hiring
the lucky candidate. This hiring process is repeated each time a vacant position
needs to be filled and costs associated with this process add up very quickly.
6. Gut instinct can be both good and bad
Instinct plays a very important role in determining the credibility of an individual.
However, it should not be the only factor that is taken into consideration during
the hiring process. An employer may feel confident that a certain candidate is well-qualified
for a position based on the in-person interview but should not dismiss other candidates
quickly. How a person may come across in person may not match their ability to perform
their job duties. This is why the
entrepreneur should not make their instinct the
decisive factor in hiring an employee. Thorough background and reference checks,
as well as follow-up interviews are all needed in deciding if a candidate qualifies
for a job.
7. A solid hiring plan
Entrepreneurs need to develop a hiring plan at the same time they develop the business
plan. This will help them budget the
new business as well as enable them to line
up a management team with impressive bios. A solid hiring plan is also very important
to an entrepreneur who does not have experience in the business area. By hiring
an impressive management team with a proven track record of success, the entrepreneur
can convince a business investor that he or she is committed to the project and
has the necessary skills to sustain a business and produce or increase profitability.
The hiring process of a new business takes ample time and preparation in order to
recruit the best-qualified candidates. The
entrepreneur first needs to determine
how many employees they plan to hire and which job positions need to be filled.
After posting employment advertisements and reviewing resumes, the employer should
abide by the legal guidelines when hiring new employees. This includes the applicant’s
consent for prescreening. The
entrepreneur of the new business also needs to inform
a candidate of their status, including the reasons for rejection due to any information
obtained through the pre-employment screening process. By law, the candidate can
contest this information.