8 tips on doing your due diligence before hiring your first employee

This is the final installment in a series about the steps small business owners need to take before hiring their first employee.

If you’ve already taken a hard look at your business and determined the right time to hire your first employee as well as figured the value your time, you’ve done the heavy lifting.

"For a sole proprietor or someone who has a boutique, there's really not a lot invested in bringing in that first person,” Bill Horton, a small business coach at BizFix and educator for Mercy Corps NW, says. "They can usually find somebody from a referral from their friends, or maybe they're using Craigslist or LinkedIn to put out a post with a very brief job description."

Horton believes the initial time investment of finding that first employee “is really minimal” compared to the emotional consideration of categorizing what tasks can be done by an employee and then handing over the reins. “The hardest thing for them [business owners] to decide is what do they need—what's the actual job description for bringing a new employee in; what's that other person going to do," he says.

And how are you, the business owner, going to let someone else sit in the driver’s seat—at least as far as some designated tasks are concerned.

The rest is simply a checklist of legal and technical requirements, and Neighborhood Notes has compiled a list which will provide you with all of the resources you need to comfortably and lawfully hire your first employee.

Preparation

1. Write a specific job description. Before you can think about searching for the perfect employee that has all the right skills, you need to clearly define on paper what skills you are seeking. This will help you set expectations for your new hire while allowing you to relinquish control of certain aspects of your businesses. More on writing effective job descriptions here.


2. Next, write an effective employment agreement. You’ll likely need consult a lawyer to define the exact areas that relate to your business and industry, but here’s an example of a basic agreement as well as some tips on writing an employee handbook.

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Get six more tips and some final advice on hiring your first employee on Neighborhood Notes.

capturing information + insights with surveys

If you think conducting a survey means canvassing your neighborhood with a clipboard and tallying results, you’ve got it wrong.

Surveys are an effective, affordable and underutilized business tool that small business owners and community organizations can use to obtain information and evaluate what’s most important to their customers and neighbors.

All well-planned projects require the input of outsiders to make sure everyone is not just adequately served but also content, and technology makes it easier than ever to tap the audience you most want to reach.

In fact, Neighborhood Notes conducted our own survey at the beginning of the year, shedding invaluable light on who you are and what’s important to you, thus allowing us to tailor the stories we write for you.

This article is not about the particulars of survey design but is rather intended to stimulate you to think about what kinds of information and insights you can creatively capture about your audience, customers and neighbors to help your business or neighborhood project move forward in the right direction.

Why Should You Conduct A Survey?

You could simply capture demographic information and feedback from your customers, but if you’re considering making a change, big or small, in your business, you’d be wise to get the input of your biggest supporters: your customers.

In spring 2008, Jo Carter, the proprietress of the clothing boutique Physical Element, says, “I had made the decision to do away with the last remnants of active sportswear and commit to 100 percent international and local fashion. A big relaunch was underway.”

While Carter made this decision on her own, she was still nervous about how it would be received. A simple survey, conducted via the email marketing software Constant Contact, “really confirmed that the direction we were taking was spot on,” Carter says. “It told us how much our service was appreciated..."

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Get more creative tips on how to craft your next survey on Neighborhood Notes.

how to figure the value of your time + cost-benefit of an employee

A small business owner recently asked Neighborhood Notes, “What do I need to do to hire my first employee?”

We began to answer that question by talking to several small business owners who have already hired their first, and in some cases second, third and more, employee. Simply enough, we asked: “How do you know when it’s time to hire your first employee?”

The responses were insightful, full of realizations and real-world experience, but when we asked business owners: “How do you value your time?” Everyone was inevitably stumped. Most said something along the lines of: “Well, it’s difficult to put a definitive value on my time.”

While business owners were able to realize the areas where their time was most effectively and most profitably spent, they did not necessarily know how to assign a dollar value to that time.

That’s where Bill Horton, a small business coach at BizFix and educator for Mercy Corps NW, comes in, counseling that it’s absolutely necessary for business owners to put a value on their time.

Horton outlines the following list of questions:

• Time to put a number to an hour of your time. Would you value your time between $50-100 per hour?


• What else could you focus on if you hired someone for $15-20 per hour to do some of your tasks?


• What tasks would you like to take off your plate?

What’s the Value of Your Time?

"If you can’t value your time, how are you able to price your product?” Horton asks. “If you're not sure how much your time is worth, how are you able to tell me that bag costs this much?"

And to take that one step further, Horton insists, "For you to be able to cover your living expenses and your business expenses, you have to know how many hours you have to work a month, and... how much are you getting paid for that hour."

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Find out how to put a dollar amount on your time and assess the cost-benefits of hiring your first employee on Neighborhood Notes.

how do you know when it's time to hire your first employee?

It's frequently estimated that the cost of recruiting, hiring and training a new employee can cost a business $4,000 (or more), which is often anywhere from 25 percent to 200 percent of annual compensation for that new worker.

As industrious and multi-talented as you may be, if your goal is to grow your business, and have a life outside of it, the reality is that you can't do it all. At some point you need to assess when the benefits of hiring another person will outweigh the cost of doing everything yourself.

There's plenty of legal, financial and individual preparation that goes into adding another mind, body and personality to the operation of your business, but let's start with assessment. How do you know when it's time to hire your first employee?

Determining When To Hire Your First Employee

If you run a boutique, bakery or restaurant, it's probably important for you to be open, selling, producing or serving your goods, six to seven days a week. Thus, many small business owners must hire their first employee right out of the gate.

"You can't do everything yourself" and keep your sanity, insists Jennifer Thomas of Jet Clothing, especially when you have a storefront that needs to be open seven days a week.

Erica Lurie of Garnish Apparel echoes this sentiment. "I knew it was time to hire my first employee when I first opened my shop and decided that I wanted to be open seven days a week, but didn't want to work seven days a week," she says. "Since an article of clothing is a comparable price to a day's wages, on any day of the week someone might come in and make a large purchase that covers your payroll for several days. So, I figured that until I had enough data to analyze accurately if there was a day of the week that was consistently not profitable, I ought to be open seven days. As it turned out, it makes sense financially to be open every day."

Bill Horton, a small business coach at BizFix and educator for Mercy Corps NW, says determining when to hire your first employee "is a challenging topic for small business owners and most of the answers come from asking a few key questions." He recommends asking yourself the following:

• Look at an average day at your business: What do you spend your time on? Make a list of what you do, and how much time it takes.


• Are you spending your time developing your business and finding new clients or doing all the routine tasks that could be done by someone else?


• Are you spending your time on tasks that generate revenue?


• Are you still wearing all the hats? Could you delegate some tasks, like hiring a bookkeeper?

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Find out how to spend your time where it's most valuable and more about assessing when to hire your first employee on Neighborhood Notes.

planning your business with your exit in mind

What will happen to your business when you retire? Do you plan to sell it? Hand it down to your kids? Or will you simply have a sale and close up shop?

Your business can have a life beyond you, the sole proprietor, but it takes planning. And this planning will not only benefit you 20 years down the line, it will also help you create stability, make decisions, and even expand your business in the present.

According to Katrina Scotto di Carlo of Supportland, when you start your business, you should be thinking with the "acquisition mindset" of a start-up, which prepares from day one to be acquired by keeping operations in order while constantly identifying a "value to the market or community." On the contrary, many small business don't often plan for what will happen when the owner, often the heart, soul and curator of the business, departs.

Many boutique owners may wonder how their business could continue without the principal tastemakers in house, but is there no value in the name or brand you've created, the relationships and supply chains you've established, the people you employ, the products you sell, or the services you provide?

Scotto di Carlo maintains "most business owners in Portland close shop not so much by choice but because they find themselves in a situation which forces that choice. Thing is, there's plenty of choices. It's just that several of the more attractive ones need thoughtful planning sometimes years in advance," like preparing your business for sale.

It's All About Planning

"Most business owners will spend approximately 80 hours on average building their business plan," says Michael P. Roy of Business Exit Timing. "And this is when they really don't have anything [like assets]. They spend an average of less than six hours figuring out ultimately how they're going to liberate themselves from their business."

Roy finds these actions incomprehensible as he believes that leaving a business is "probably the most significant, complex and important financial decision a business owner will make."

"If the biggest cause of failure is lack of planning," Roy says, "then why don't you spend and invest more time in planning how ultimately you want to leave your business?"

The goal of exit planners is to help small business owners design and implement "a written, formal exit plan—something that severs as a roadmap, that can empower and guide you through the exiting process"—whether you plan to sell to a third party (which Roy says only 20 percent of businesses actually succeed in doing), pass down to employees or family, or even close. No matter what you intend to do, Roy emphasizes contingency planning, which will help you exit your business or prepare for the unexpected.

Contingency Plans

Planning how to exit your business may also be an opportunity to organize and grow your business. If you don't have documentation of how your business functions, how would you ever go on vacation without closing your doors for a week? Or, more seriously, what would happen if you were injured or hospitalized?

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Read the rest on Neighborhood Notes.

how small business owners should be networking

Networking doesn't have to feel like a sale. Or an awkwardly ostentatious forum for egotistical schmoozing and one-upmanship.

Networking should feel more like socializing—finding common interests and then sharing ideas and solutions to problems—especially in Portland's diverse but cooperative small business culture.

So-called networking "events" shouldn't even necessarily be formal affairs or paid conferences, but rather a real, honest encounter where you can develop professional collaboration or even a friendship. And while networking often means breaking out of your shell and putting your best foot forward, many difficult situations in life are also moments of growth and require going outside of your comfort zone.

But, you can use new school, digital means to initiate contact with the groups and individuals you're interested in approaching before tackling the in-person encounter. Many small business education opportunities are also great places for networking, but here are few more ideas to help you find the like minds that surround you in your own city.

Make Internet Friends

Social media networks provide immense opportunities to find others with similar tastes and cultivate online relationships. These relationships don't take much effort and there's no cost.

Social sites like Facebook and LinkedIn have both private and public groups for every field imaginable. Start with an alumni group or widely recognized association or even just search the listings until some piques your interest. A site that's even more specific is Biznik, a community of independent business people, where you can create a profile, add friends, join conversations, and find events to attend.

Then, the interaction is up to you—simply follow along to see what others are talking about or interact, communicating with people without even joining a paid-group and then feeling bad because you never attended any events or mixers.

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Get more networking tips on Neighborhood Notes.

small business education opportunities for local entrepreneurs

From multi-week courses to single workshops, a variety of small business education opportunities are available to all Portland entrepreneurs.

Small businesses dominate the Portland marketplace, comprising 95% of all firms and employing 254,000 people, according to the Portland Development Commission. Yet, the PDC also points out that even though “our local economy is populated by thousands of small business enterprises, many... struggle for viability and survival while providing hundreds of thousands of jobs with billions of dollars in payroll."

The best way to ensure you stay in business is to stay educated, whether that’s keeping up with the latest technology or learning a new skill to further expand your business.

If you are looking to start a business or compete in an evolving marketplace, Portland offers many forums for small business education from traditional, multi-week courses to single workshops—and one that even serves cake! Neighborhood Notes has scoured myriad choices to compile a list of interesting and affordable education opportunities.

Pay-As-You-Go Workshops

If you’d just like to take a single, intensive class or join a group of like minds, the following inventive organizations allow you to drop in and out as your schedule allows.

SEMpdx
Although there are plenty of laggards out there, search engine marketing (SEM) is hardly some obscure industry; in reality, it’s easily the largest segment of online advertising. Google raked in $36.5 billion in advertising revenues last year, a 29 percent growth over the previous year, and SEMpdx is your local industry resource with a mission "to inform and educate area businesses on the benefits of SEM to bottom line revenue." Search Engine Marketing Professionals of Portland offers monthly events where professional talent comes together to learn and share ideas. Most monthly events are open to anyone who wants to attend and prices range from $20-55, with discounts for members and registering early, plus SEMpdx's big search marketing and social media conference, the annual SearchFest now in its sixth year, is coming up on Feb. 24.

CAKE

Consulting And Knowledge Exchange has a simple goal: "We believe everyone should follow their dreams and if that dream is to own a business, we want to help." A fresh (now in its sixth week) organization, CAKE helps by organizing "a weekly series of Portland-based, donation-driven, down-and-dirty small business workshops and parties" where guest speakers serve up recipes on brainstorming, branding, market research and more in a casual environment—cake is actually served at every "party." Feel free to donate to the cause, ask tough questions you want answered, or even workshop your own project while picking up "scrappy business hacks for each topic" on Wednesdays from 6-8:30 p.m.

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Find more small business education opportunities on Neighborhood Notes.

10 creative uses for your small business calendar

Any small business owner or organization can create value through creative calendaring.

Business calendars are nothing new—from scheduling appointments and meetings to planning promotions and paying the bills or employees—but it's likely that you are not using your calendar to its full potential.

"I'm trying to move towards a space where it's not only an individual planning tool, but it's also a group planning tool and a historical record for the organization," explains Loren Guerriero, the Community Outreach Coordinator for Mercy Corps NW.

Don't worry, you don't have to look far to learn about the benefits of advanced calendaring processes as the testimonials below from several Portland thought leaders will demonstrate that any small business owner or organization can create value through creative calendaring.

"I rely on my calendar; it's critical to how I conduct myself through the day,” says Lisa Christy, an Associate Media Director at Wieden+Kennedy. "If something's not on the calendar, it's not real."

If your own sentiments don't echo Christy's, it might be time to reconsider how you use calendars. So, what are the purposes for a calendar?

Organization

Calendars can help you compartmentalize your time. They will help you stay organized, plan ahead and even relieve some stress while potentially increasing productivity.

"I don't have to worry about where I'm supposed to be and when and with whom," Christy continues. "It frees all that up… so I can focus my energy on thinking about what I'm doing as opposed to worrying about where I'm supposed to be."

"It keeps me on task and keeps me going," Christy adds.

In an agency environment where "a lot of people are working on a lot of different stuff" like at Ben Lloyd's Amplify Interactive, some employees choose to block out certain times to work on the same weekly tasks or projects for clients, making sure everything is properly maintained and deadlines are met.

Communication

Or better yet, communicating without communicating. At a boutique digital agency like Amplify Interactive, president Ben Lloyd can schedule appointments with his employees without even exchanging a word. Simply turn on several calendars side by side, compare availabilities, and Lloyd can schedule a meeting for the entire team with a few clicks. Employees will automatically see the meeting, location, time, and any other pertinent information in their own calendar windows.

"Organization and calendaring is usually one of the first things that we talk about when I interview people," Lloyd says, "because it's a really big part of working in an agency environment like ours."

But the communication extends far beyond the walls of his office and personal employees.

"We're able to send calendar appointments to clients and see who's attending all from the calendaring system," Lloyd says.

And organizations like Mercy Corps NW have both internal and external calendars.

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Read the next eight tips on Neighborhood Notes.