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One of my e-businesses is a growing eCommerce store. We do some dropshipping, and we store some in a looks-like-a-warehouse location. There are a number of obvious responsibilities - phone customer service, some tech support, some sales, order processing and fullfillment. The time has come to hire a first employee, so I am trying to figure this one out.
Who was your first employee, and why did you hire him/her?
Who was your first employee, and why did you hire him/her?
Oh, you mean besides myself?
My wife. Because I got along well with her, she worked cheaply, and I could push her to work long hours. And I could sleep with her and not have to worry about a sexual harassment lawsuit.
Oh, you mean outside the family?
We hired a recent college grad to do a lot of low-level HTML, programming, graphics, answering phones, etc. Basically a gopher to free up the principles from having to do a lot of the grungey, labor-intensive work. Why? Because she had a friendly personality, worked cheaply (hmm, can you sense a trend here? :) ), and she was willing to work hard.
[edited by: LifeinAsia at 4:59 pm (utc) on May 10, 2007]
Can't hire my wife...she's got a career, and will probably kick my butt as far as organizing goes...she doesn't fancy computers too much
Basically that's what I think - a college grad or still-in-college. I get all kinds of responses to our job postings, from mid-age former computer gurus wanting to quit computer career, to retired salemen, to former telemarketers and even healthcare workers.
Want to tap into people who have bigger established businesses, and who started with some money behind them - who did you hire first and why?
I know a guy who's doing ecommerce ventures. His first hire is always a secretary/customer service rep.
Age over 40 - tend to have a better work ethic than younger workers. Are more likely to show up and be on time. tend not to have a computer background. Over 60 and you most likely can't teach them much about technology beyond the very basics
Anyone under the age of 30 - won't have any problem with tech, but lousy work ethic. High school kids are usually easier to have stick to a schedule (if you can handle after school). College kids need to rework schedule every semester. If you can find a college kid that is paying his own way through college you are alright, but so many of todays kids are getting loans to cover expenses, which makes the job just for spending money so you have less leverage.
Young sounding females convert the best on phone calls.
Males tend to have more selfconfidence and are able to do more without asking you how to do it. Downside is they are more likely to do it their way even if it is wrong.
i used to have stacks of manual admin work - the business grew rapidly over a couple of years - i focused on development and ignored the admin - i tried hiring admin staff but they "didn't get it" or hated it - eventaully the backlog of admin took over and i was getting maybe an hour a day for "development" (programming etc)
so i hired a "junior" level programmer - he had *some* experience, good enough for me but not good enough to get a well paid job elsewhere - i spent my hour a day writing job specs - he spent several hours a day programming with the focus on automating a lot of manual admin tasks - the more taks he automated, the more of my time he freed up - he pitched in with data entry etc as well - i had to help him out / guide him with the programming, but he got it - he worked hard
we eventually set up a new business together - we work part time on it - brilliant working relationship
i've recently hired in a couple of homeworkers - single parents on state benefits - they only work a few hours a week doing some mind-numbing data entry etc - someone's gotta do it and nobody wants to do more than a few hours a week so this works well - they can only work like 3 hours a week each cos of earnings restrictions, but it's ideal
downside is actually finding people intelligent enough and with the willpower to do it - working from home for someone else isn't easy
my girlfriend, a long time administrator / secretary, quit her job some months ago - i've employed her on a casual basis here and there - we don't want to work together cos work and relationships are not easy sometimes - but if i need work doing and she wants money, why not?
somehow i manage to get a 3 foot pile of post every month - invoices / letters / bills etc - personal and business - filing is tiresome - i stare at the pile and it doesn't disappear .... i'd rather spend the time taking the kids bowling or something - so i kinda like "employ" them to help with the filing every now and then (when the pile gets so big it falls over and gets in our way) so we get more time to go out - they enjoy it and get bit of extra money and bit more time with me so all works well
got a few other staff doing programming / admin etc - but they come and go .....
Your first and second employee, will take a deep cut into your profits.
I don't see how a $10-$15 / hour employee can take much of the profits. But than again, maybe we are talking about different things here.
At one point I was considering finding someone for a profit sharing opportunity i.e. they do all non-technical business operations in exchange for a % of profits. I even interviewed a few folks. Don't believe it can work with someone off the street though, even if (s)he looks good on paper.
I don't see how a $10-$15 / hour employee can take much of the profits.
Remember that the $10-15/hour is just a start. Don't forget payroll taxes and unemployment insurance. And depending on your local laws, you may be required to provide health insurance. If you have a retirement plan implemented for yourself (which, of course, you *DO*, right?), you may have to include the employee.
Plus, employees do not hit the ground running and start working by themselves. Factor in a number of days/weeks (depending on the complexity oif your business and the tasks he/she will be doing) of training in the begining. That means little/no productivity from the employee and your productivity drops immensely as you spend all that time training. Even after the employee is up to speed, you will still need to spend some amount of time on supervising.
Oh, and did you factor in all the hours/days (and money) you have to spend to get the employee in the first palce? You have to place ads, scan through resumes, conduct interviews, etc. All that either comes out of your time (lost productivity) or your wallet (from outsourcing to an agency).
Later, you find out you made a bad hiring decision and need to let the employee go. There goes some more hours making sure you do everything correctly. If not, you may find yourslef wasting more time and money defending yourself in some sort of unfair dismissal lawsuit. (And if the ex-employee files for unemployment, your unemployment insurance rates may go up as well.) And now you get to start all over with the hiring process.
Thankfully, not all employees result in such a pessimistic situation. But if expect perfection from the begining, you will most likely be sadly disappointed.
LifeinAsia: Don't forget payroll taxes and unemployment insurance.... you may be required to provide health insurance.
I dont' have full-time employees (I outsource), and I don't plan to.
This will be a 1099-only...for those not intimately familiar with US tax laws, it is a contractor that receives a check and pays their own taxes, insurance, medical, etc. Less headaches.
The cost is still here, with going through resumes and interviews, getting a person up to speed, answering questions, etc. Let's just say, that I've got a lot of procedures to put into an employee manual.
I dont' have full-time employees (I outsource... This will be a 1099-only
I've got a lot of procedures to put into an employee manual.
Just because you call the person a "contractor" instead of an "employee" does not make it so. The rules are VERY specific regarding this and the penalties are not light. Time and time again I have seen employers (and their employees) suffer because of trying to dodge taxes and other benefits.
If contractor, why do you need an "employee" manual?
Because instead of going to you with the same question over and over, they can read the fine manual!
Well, what if person leaves, would you have to go over everything 3 times with new person again? It doesn't matter how you call it.
I have seen employers (and their employees) suffer because of trying to dodge taxes and other benefits
Income taxes in U.S. don't exist by law. What exists is voluntary self-assessing payments enforced by IRS and the government as "income tax". The only taxes that are required to be paid by law are alcohol, tobacco and firearms taxes. But let's not go there.
There are many guidelines on how to determine whether a person is an employee or an independent contractor. In the internet age, you can let anyone work from home, part time, or not on the schedule, which will not pass the so called "20 factors for IRS to trick you out of your money to qualify your contractors as employees".
Income taxes in U.S. don't exist by law. What exists is voluntary self-assessing payments enforced by IRS and the government as "income tax". The only taxes that are required to be paid by law are alcohol, tobacco and firearms taxes. But let's not go there.
Look, we're only trying to give you advice, based on our years of knowledge and experience. It's up to you whether or not you choose to follow it.
But you need to know that the Law is on your side. And you need to know the Law, period. That helps a lot.
This way you can clearly tell who is a Contractor, and who is Employee, and avoid being taxed twice.
I guess I need to clarify. I've been a contractor for a good number of IT companies a while back. There are contractors who stay at the same place for years. They do the same work for years. There's an obvious legal ground for that, there are rules, and instead of being plain "scared that IRS will qualify you wrong" one needs to read the law and find out where is this fine line - and follow it.
For $10-$15 an hour, and no benefits, I hope you're not needing someone with any important skills? If you need any skills, the one hope would be finding someone whose spouse has a good job with benefits and who is just looking for a little extra income.
And as has been pointed out, but perhaps not directly, practice avoiding the word "employee" in all situations. You might have an office handbook, but not an "employee handbook." You might pay someone $10-$15 an hour to do some work for you, but it sounds as if you really don't want that person to be a "$10-$15/hour employee," as you called it in one post. Or do you?
[edited by: Beagle at 10:54 pm (utc) on May 15, 2007]
Anyone who is seeking a help in growing their business, must learn the laws and regulations. That is an essential part of doing a business. But don't let naysayers and IRS scare you out of being successful!
Seriously, if there's a law when you HAVE to hire everyone as employee, than advocates of that law would better have their plumber, their cleaning lady, their electritian, handyman, grass cutter, babysitter, and even their mailman hired as an employee, on their payroll.
Sounds comical? Because it is. There's nothing on the books that can prevent you from hiring a person who will pack your boxes for 2 hours a day as contractor, not as employee.
But if you, in a typical American Management style want to hire someone for 40 hours a week and make them work 60 hours with no paid overtime, then your greedy arse is already getting too much, and you better pay extra taxes, benefits and pensions.
Everything in the middle is open to interpretation.
Sounds comical? Because it is. There's nothing on the books that can prevent you from hiring a person who will pack your boxes for 2 hours a day as contractor, not as employee.
My first employee was to do the accounts. Had to employ her as an employee and not a contractor because I set her hours and her wage. In the UK, they can only be a contractor if they set their own wage and hours.
But I think you would set accountant's pay either way. Even if there's a temp agency that has a rate - you basically have to agree to the rate, which makes it that you set it. I don't see a situation when you don't set a rate, they can't come in and say "pay us X" and make you pay it.
Which makes me to believe that a "set hours" is a key here. Then if you could write a contract that way so that an accountant works her own hours and must complete Y amount of work, instead of "come in Z hours per day to your desk and do N transactions", wouldn't that qualify as contracting work?
There's, after all, such thing as hourly contracting work.
But she is no longer working for me, and I anticipate that she will be my first and last employee. I discovered that I actually like working by myself more than I like having an employee, and that I can do all the work myself if I work on being organized. This has been the greatest thing I have learned from having an employee--that the problem is not that I have too much work for one person to do but that I am not organized. I am still working on ways to be more efficient.
It's frustrating when you could expand with a casual packer (who'd appreciate the cash) but have to comply with employment legislation.
[edited by: Patrick_Taylor at 10:09 pm (utc) on May 16, 2007]
[edited by: HRoth at 4:18 pm (utc) on May 26, 2007]
Basically you need to ask yourself - what am I good at that makes me money? I hope taking phone orders and packaging boxes isn't the answer!
Why would I want to spend 2 hours packaging boxes and 2 hours doing phone invoices when I could spend $50 for someone to do that and then spend those 2-4 hours doing site marketing/improvements that will eventually make my business 5 times that amount?
Honestly I can't wait until I grow my store large enough where I need employees to do the mundane things so I can focus 100% of my efforts on marketing and growing the site - which is what I'm good at.
[edited by: HRoth at 12:09 am (utc) on May 28, 2007]
since then, all others have been 1099 contractors, not employees. no workmans comp, unemployment, withholding, etc. they work at home with their own computers and if they don't perform, they aren't fired, we simply run out of work to give them.
it's like anything else -- a few work out great, some suck something fierce, and most are middle of the road. but we try to stick true to our three rules of business: ABC, NFC, and NFE (No, uhmmm "Freakin" Employees)
On the subject - I've got someone helping out answering customer emails, shipment tracking, etc. She even does some packaging. So far she saves about 2 hours of my time (worth more than $100/hr) for $10/hr. Sounds like a no-brainer.
