A Bootstrapper's Formula For Hiring Your First Employee

“I’m sorry, but I have to let you go.”

I never wanted to have to say those words.  Especially not to my very first employee!  Hiring, and then having to let go my first employee was one of the hardest things I’ve had to do in my young career, bootstrapping a business.

It was 2011 and my newly launched SaaS business was off and running. I was extremely busy, working 12+ hour days.  As a solo-founder, I was doing it all.

I figured there was more than enough work to fill up an employee’s plate. So I went for it. I hired my first virtual assistant.

I started by giving her a few basic tasks, like formatting a blog post and posting to social media. That took about 2 hours. Then she pinged me, “All done. What should I work on next?”

I stopped what I was doing and thought about what I could assign to her next…

I remembered there was that PR plan I learned about from watching a Mixergy course.  So I spent an hour writing instructions for her to gather press contacts into a spreadsheet. That filled up another day of work to keep her busy.  She did a great job.  Too bad that PR plan didn’t produce the results I had hoped for. Back to the drawing board.

Again, my employee is left waiting for her next task.  So once again, I stopped what I was working on, and thought about what I could give her.

A client project was starting up, so I asked her to install WordPress on a staging site. She knocked it out in under an hour, no problem.  Too bad that’s the last time I’ll need that done for a while (the next client project wouldn’t start for a few more months).

That’s when it dawned on me.

I’m spending even more time figuring out how to fill up my new employee’s time. Meanwhile, the day-to-day revenue generating activities are falling behind, slowing down cash flow. And I’m still paying her to sit and wait while I get the business together.

It was clear I would have to let her go. My first hiring experience was a failure. The worst part was that she was an excellent worker. The problem was my own doing. My business wasn’t ready to support an employee. I wasn’t ready to manage one.

Yet.

Living the dream

Reading the E-Myth Revisited back in 2010 had a big impact on me. That’s when I learned I can be more than a freelancer or solo founder, but actually become a business owner. I dreamed of the day I could be ready to hire, so that I as the founder can work on my business, while my employees worked in the business. But it would be several years, and several wrong turns before I finally figured out how to get there.

Today, I manage a small team of three employees. Two of them are in the Philippines, one is in California. In addition, I work with a couple of contractors (writers, developers, an audio editor), who handle additional work on a contract basis.

I’ve finally hit that groove.  Most of my time is spent focused on strategy, process, and helping my team work more efficiently together. It’s still a very challenging task to keep this ship sailing in the right direction.

But it’s more exciting than ever.

Last week, listening to Dan and Ian from the Tropical MBA podcast talk about hiring, confirmed a lot of the things I learned the hard way these last few years.  I thought about the key steps I took to finally prepare for bringing on my first employee, and then few more soon after that.

All the details are ahead, but to summarize what I’m about to share with you:

• Why “being busy” isn’t a reason to hire.
• Step 1: Standardize the work
• Step 2: Document procedures
• Step 3: List your employee’s tasks before hiring them
• Step 4: The 20 hour rule
• Step 5: Hey Founder, you still plan to work, right?
• Step 6: Figuring out the financials
• Step 7: Making the hire
• Step 8: Planning their first week
• Step 9: Week 2 and beyond

Being busy is not enough.

Back when I hired and quickly fired my first employee, I learned that just “being busy” is not a reason to hire someone.

You have to be busy with the right type of tasks. Tasks that are highly repeatable. But even repeatable tasks can often be “busy work” that doesn’t contribute a whole lot to the business.

That’s why you must first figure out the strategies and high-level processes that actually produce results. Then, boil those down into daily and weekly tasks that can ultimately be delegated to an employee.

That’s the first concept I learned the hard way. Now let’s look at the actionable steps you can take to get to employee #1.

Step 1: Standardize the work

Before you can begin to hammer out processes and procedures, you have to standardize the work itself.

That means tweaking your services so that they are more focused around doing one (or just a few) things really well, and delivering that service again and again.

There is a new trend lately, going by the name Productized Services. Great examples of these are WP Curve (basic customer support for WordPress) and Audit WP (one-time SEO audits). These are essentially consulting services, packaged and delivered in a standardized way. That makes them very attractive to customers, but it also makes them very easy to systemize and delegate for the business owner. Win Win.

Step 2: Document Procedures

Once you’ve nailed down your business model and service you’re delivering, you’re ready to begin documenting procedures.

Document early and document often. That’s my mantra when it comes to building out our operations. You want to get all of those repeatable processes out of your head and into a documented standard operating procedure.

A few important tips when it comes to documenting:

• Do it well before you begin to hire. At first, you’re documenting the procedure for yourself to follow. This helps you refine the steps.  It also helps you get into the “systems” mindset.
• Start simple. Just a quick bullet list of steps is a great start. You can (and will) improve and expand the procedure later. Just start with something.
• Keep a standardized format for all procedures. A procedure for creating procedures, if you will. You don’t want them scattered across several apps, with varying formats and styles.

We use Google Docs. I found this to be the easiest to edit/update and share with my team and contractors. Every procedure gets it’s own doc. Every procedure is catalogued in a master spreadsheet, and organized by category (marketing, support, administrative, etc.).

Here’s what ours look like:

By the way, You can snag a copy of the procedure seen above in my post about the blogging guidelines we give to our writers.

Step 3: List your 1st employee’s tasks before hiring them

Each of my employees gets a board in Trello.  Within that board, we have 3 lists:

• To Do – Things this person is working on or will work on soon.  These change from week to week.
• Repeating – Things this person does every week, like clockwork.  Everybody has a few of these.
• Ongoing – Things this person can do whenever they have nothing else to work on.  “Filler” work, but productive work nonetheless.

Here’s what one of our employee’s Trello boards could like:

This is very handy for keeping track of what my team is working, and how busy someone is.  But you know what it’s even more useful for?

Tracking the workload of an employee before that person even exists!

Huh??

I actually create this board in Trello months before I hire the employee.  During that time, I slowly fill it up with tasks that I’d eventually plan to delegate to this person, once they’re hired.  At first, it only contains one or two tasks.  But once those lists start to grow, it’s time to start looking for someone.

This isn’t just for hiring your first employee.  I do it for every position I plan to hire for.

Step 4: The 20 Hour Rule

So when are you actually ready to hire the person?

I think a good rule of thumb is 20 hours.  Once you’ve listed 20 hours worth of repeatable tasks — things they can do week after week — you’re about ready to fill that role, at least on a part-time basis.

Remember:  We’re not looking for tasks they can do this week only.  We must have repeatable work for them to take on.  You don’t want to make the same mistake I made early on, when I hired because I was so busy (right now), without thinking about the ongoing workload (or lack thereof).

Step 5: Hey Founder, you still plan to work, right?

This is an important step that often goes overlooked, because you’re so focused on figuring out what your new employee will be doing: Plan what you will be doing after bringing on an employee.

Don’t forget why you’re hiring in the first place.  You’re not hiring because you’re too busy.  You’re hiring because you need to work on your business (and work on growing it).

So what will you be doing, while your employee is covering the workload that used to occupy your time?  How will you use that time to grow the business?

Here are a few ideas:

• Talk to more customers
• Write a new email marketing campaign
• Build the product or feature your customers have been asking for
• Optimize your landing pages and run an A/B test.
• Write more procedures

Step 6: Figure out the financials

So you’ve got 20 hours of repeatable work lined up.  You’re fired up dreaming about all the new initiatives you plan to push forward as your team grows.  Let’s do this!

Not so fast… There’s the whole money aspect.  Can your business afford to hire an employee yet?

I can only speak from my own experience, self-funding my business the whole way through.  That is, I fund the growth of my team using revenue collected from customers. No investors. No credit card debt or bank loans.

For a while, I just waited and waited before hiring someone.  Without a large payroll, I was able to take home a comfortable-enough salary from the business.  But without the team in place, it was very difficult — near impossible — to hit the growth we needed.

So I waited just a little while longer, inched up our monthly revenue just a little more, and… I gave myself a pay cut.

That’s right.  I cut my own salary about 25% (even more some months).  This left just enough to cover our bills at home (my wife works too), and be able to hire my first employee, a full-time virtual assistant.

As the business grew over the next year or so, I was able to inch my salary up, but still to a limited extent, because I continued to hire and grow the team.  I prefer to reinvest in the business while taking home “just enough”, and I suggest you embrace this mindset sooner rather than later.

A few tips for bootstrappers to ease the financial burden of hiring early on:

• Hire remotely.  I work with a mix of people based overseas and here in the US and Canada.  Everybody works remotely, which can lower costs.
• Start with part-time.  Most of my employees start at 25 hours and increase over time.
• Start with contractors.  For years I hired contractors on a project basis.  This helped me learn how to manage, delegate, and collaborate with teammates before having employees with me on a regular basis.

Step 7: Make your first hire.

OK, now you’re ready to pull the trigger.  Interviewing and evaluating candidates is a topic for another day.

But I’ll tell you the one thing I look for in every person that I hire (no matter what the role is): Communication skills.  If you can write, type, and speak with clarity, and show that you listen and ask the right questions, you’ll rise right to the top of my short list.

Step 8: Planning their first week

The first week is always spent training.

Since my business is on the web (I’m sure yours is too), one of the first things I ask them to do is read through every page of our website, support site, and marketing materials.  Then we discuss and I’ll answer any questions.  I want them to learn about our product (and how we communicate it) inside and out.

I also ask them to read through our customer support tickets to get a feel for what our customers say and how we answer their questions.

Then I have them use our product — every aspect of it.  In our case, we’re a web design service, so I have them create a website as if they were a customer.  I suggest you have your team do a similar exercise using your product (whatever your product is).

For one of my employees who handles customer calls, I had her “shadow” me on several calls, listening in to how I talk to customers.  Then we discussed those calls afterward and I answered her questions. For email support reps, I might BCC them on my emails before they start handling their own tickets.

Step 9: Second week and on…

By the 2nd week, I usually want the person to be working on “real” work.  That could be handling real customer calls or emails, or preparing a real email blast, or something else in the business.

It was difficult at first to “let go” and hand over real responsibilities to my team.  But I learned that the sooner I can take this step, the better.

That first week training can only take them so far.  They don’t truly learn the job until they’re thrown into the mix.

Expect that there will be some hiccups and errors at first.  If there aren’t, then you’re probably not giving them enough meaningful work.  In fact, I want new employees to make a few mistakes early on, so that they can fully learn why something went wrong, and how to get it right next time.

Now you’re cooking…

Growing your team in these early days is incredibly exciting.  At least it is for me.  My role has changed more than ever before, and it’s always a learning experience.

Tell me how you made (or plan to make) that leap into hiring employee #1!