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When To Hire Your First Employee: A Trade Business Owner's Guide

As a sole proprietor working solo in the trades industry, the idea of making your first business hire and bringing someone new onboard can be daunting. It would be doubling your workforce, after all, and you're used to only being responsible for your own actions. You're bound to have legitimate questions and concerns: Will I be able to afford it? Will it really help my business grow? What if I choose the wrong person?

But recognizing the right time to expand can transform your business, opening doors to new opportunities and growth. In this article, we'll explore clear indicators and actionable insights to help you decide if you're ready to take this next step.

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Of course, if you're not already using it, you may just need job management software like ServiceM8 to automate some of your admin workload and client communications for you - it's a lot cheaper than payroll! Try it for 14 days free.

9 Signs You May Be Ready To Hire Your First Employee

1. Consistent Workload

Sign of Readiness: You have a steady stream of work that you can't handle alone.

When your phone never stops ringing and your inbox is overflowing with job requests, it’s a double-edged sword. While a consistent workload is a sign of a thriving business, it can quickly lead to burnout if you're handling everything on your own.

Indicators:

  • Turning down jobs: If you're frequently declining projects because you simply can't fit them into your schedule, it's a red flag.
  • Working long hours: Pushing yourself to work late nights and weekends to meet client demands isn't sustainable.
  • Constant backlog: A growing list of pending jobs or outstanding paperwork means you're struggling to keep up with your workload.

Actionable Insight:

Start tracking your job completion rate and client demand. Use a simple spreadsheet or a job management software like ServiceM8 to monitor how many jobs you're completing versus how many you're turning away. ServiceM8’s scheduling feature can help you visualize your workload and identify when it’s time to bring additional help on board.

2. Financial Stability

Sign of Readiness: Your business finances are strong and stable.

Hiring an employee is a significant financial commitment. You owe it to yourself and to your prospective employee to ensure that your business is financially sound before taking this step.

Indicators:

  • Regular profits: Consistent profitability over several months is a good indicator of financial health.
  • Healthy cash flow: Adequate cash flow ensures you can cover payroll and other expenses.
  • Savings for payroll: Having a reserve fund for at least a few months of payroll can provide a safety net as you adjust to this new expense (the U.S. Small Business Administration estimates an employee typically costs 1.25 to 1.4 times the salary).

Actionable Insight:

Conduct a thorough financial health check. Review your income statements, balance sheets, and cash flow statements. Create a budget that includes potential employee costs, such as salary, benefits, training, and new equipment, to see if yo can comfortably absorb these costs. ServiceM8 can help you keep track of your financials by integrating with accounting software like Xero and QuickBooks, ensuring you have a clear picture of your financial health.

infographic comparing two small trade business owners, one cleaner and one plumber, and the indicators of if they are ready to hire their first employee

3. High Quality Standards

Sign of Readiness: You struggle to maintain high quality due to workload.

Your reputation hinges on the quality of your work. As a solo operator, maintaining high standards can become challenging as your workload increases.

Indicators:

  • Mistakes: Errors in your work, especially those you wouldn’t normally make, indicate you're overstretched.
  • Rushed jobs: Completing projects hastily to keep up with demand can compromise quality - cutting corners in a trades business isn't usually a good thing.

Actionable Insight:

Assess your recent work quality and gather client feedback. Look for trends in complaints and areas where mistakes are occurring. If you notice a decline in the quality of your work, or if you're concerned it will become a problem in the near future, it's time to bring in help to ensure your standards remain high. ServiceM8’s client feedback feature can help you easily collect and analyze customer feedback to maintain high quality standards.

4. Growth Opportunities

Sign of Readiness: There are clear opportunities for business growth.

Expanding your business often means capitalizing on new opportunities. However, doing so as a solo operator can be challenging.

Indicators:

  • New markets: Potential to enter new geographic areas or industry segments.
  • Service expansion: Opportunities to offer additional services that require more manpower.
  • Increasing inquiries: A rise in client inquiries that you can't handle alone.

Actionable Insight:

Conduct market research to understand the demand for new services or expansion into new areas. If the opportunities are substantial and sustainable, hiring an employee can help you seize them. ServiceM8’s reporting features can help you analyze trends and identify growth opportunities, making it easier to decide when it’s time to expand your team.

5. Expertise and Skills Gap

Sign of Readiness: Need for skills or expertise beyond your own.

Sometimes, the growth of your business is hindered by a lack of specific skills or expertise. Often, you can solve this by bringing in a subcontractor, but over time it might make more financial sense to keep the work in-house.

Indicators:

  • Projects requiring specialized skills: Jobs that need expertise you don’t possess are becoming more and more frequent.
  • Lack of time for skill development: No time to learn new skills due to your workload.

Actionable Insight:

List the skills needed for your business growth and identify gaps. If multiple projects require expertise you don't have, but you think will be needed on an ongoing basis in the future, consider hiring someone who brings these skills to the table. This can enhance your service offerings and open up new revenue streams.

Emailing invoice from ServiceM8 app
Invoice generated from ServiceM8 mobile app

6. Customer Service and Relationships

Sign of Readiness: Customer service is suffering.

Your reputation doesn't just hinge on the quality of your work - the way you treat your customers is just as important. If your customer service is slipping, it’s a sign that you’re stretched too thin.

Indicators:

  • Delays in response times: Slow responses to client inquiries can harm your reputation with existing clients and lose business from prospective clients.
  • Inability to provide personalized attention: Clients feeling neglected or undervalued won't promote you to friends and family.

Actionable Insight:

Evaluate your customer service quality and relationship management. If delays and lack of personalized attention are common, hiring an employee to handle customer interactions can improve client satisfaction and loyalty. ServiceM8’s automated communication features can help ensure timely responses and follow-ups, enhancing your customer service even before you hire additional staff.

7. Administrative Overload

Sign of Readiness: Administrative tasks are consuming too much of your time.

Administrative duties are essential but can be time-consuming, taking you away from core business activities.

Indicators:

  • Late invoicing: Delays in sending invoices can impact cash flow.
  • Disorganized scheduling: Inefficiencies in managing your schedule can lead to missed opportunities and angry customers.
  • Neglected follow-ups: Failure to follow up with clients or leads can result in lost business.

Actionable Insight:

Calculate the time spent on administrative tasks. If a significant portion of your day is consumed by admin work, it’s time to consider delegating these tasks. ServiceM8’s invoicing and scheduling features can streamline these processes, helping you manage your time more effectively.

8. Personal Well-Being

Sign of Readiness: Your personal well-being is at risk.

Always remember - no business is more important than your health and well-being. Overworking can lead to burnout, affecting both your personal life and your work.

Indicators:

  • Lack of work-life balance: Difficulty finding time for personal activities and family.
  • Mental or physical exhaustion: Feeling constantly tired and overwhelmed, possibly even seeing health issues arising from stress and overwork.

Actionable Insight:

Reflect on your health and work-life balance. If you’re experiencing signs of burnout or struggling to maintain a balance, you need to make changes. Hiring an employee is one option to reduce your workload and help you regain a healthier lifestyle.

9. Support from Job Management Software

Sign of Readiness: Efficient use of job management software but still overloaded.

Job management software for small trade businesses can streamline operations, but there’s a limit to what it can achieve if there is only one person trying to manage everything.

Indicators:

  • Optimized software usage: Fully utilizing software features but still overwhelmed.
  • Remaining pain points: Persistent issues, such as too few hours in the day to handle the number of requests you are getting, that software alone can't resolve.

Actionable Insight:

Evaluate how software has streamlined your operations and identify remaining pain points. If you’re still overwhelmed despite using job management tools, it’s time to hire additional help to manage the workload. ServiceM8 can help you automate many aspects of your business, but it's still a service business - sometimes you just need another human.

Next Steps

Deciding to hire your first employee is a significant milestone in your business journey. By recognizing the signs of readiness—consistent workload, financial stability, maintaining high quality, growth opportunities, expertise gaps, customer service challenges, administrative overload, personal well-being, and support from job management software—you can make an informed decision.

Take the time to assess your situation against these indicators. If several apply to you, it’s a clear signal that bringing on your first employee could be the next best step for your business.


Ready to take the plunge? Start planning for your first hire today and consider how job management software can assist in a smoother transition.

Learn why more and more business owners are choosing ServiceM8.

Article last updated on
June 28, 2024

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