12 tips for small-business hiring

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It’s a great time to hire, especially if you run a small business.

Similar to buying a home or picking up blue-chip stocks, those with the money to acquire new staff will find a wealth of choices. For small-business owners, though, that may also require spending some extra time sorting through all those applications.

Here are tips to help you attract, screen and hire the right person for the job:

1. Define the position.
Exactly what is the job? What skills does it require? Too many times, when a small-business owner hires, he expects the new employee to shoulder everything that isn’t being done currently, says Joe Kennedy, author of “The Small Business Owners Manual.” And that can be everything from keeping the books to making the coffee.

Instead, keep a running list of the tasks with which you might need help, he says, and use it to write the job description when you’re ready to hire.

2. Can you fill the need another way?
Unlike large businesses, which are bogged down with policies and procedures, small businesses are free to look at less traditional solutions, says Fred Steingold, a Chicago-based attorney and the author of “Hiring Your First Employee.” If you need help around the office, do you want to hire someone outright or go through a temp agency for a while? While a temp will cost more, the arrangement lets you “try out” the employee without paperwork or commitments.

Another option is independent contractors. If you need occasional help, like bookkeeping, you may be able to hire someone to handle the duties from time to time as an independent contractor, says Steingold. You’re paying the person only when needed, you don’t have to add another body to the payroll. 

3. Don’t stop recruiting.
Rule No.1 for small-business owners: Never stop recruiting, says Kennedy. “The moment you’re done hiring, you should be keeping your antennae up for the future. That’s something that flexible smaller companies can do that bigger firms, often weighted down with policies and procedures, cannot, he says.

4. Borrow from the competition.
Little companies have to do everything the big ones do only with less staff and budget. Here’s a way to even the odds: When you need to hire, scour your competition’s ads for similar positions, says career coach Martin Yate, career coach. What skills are they seeking? And what are they offering in return?

Two sources he recommends: the individual Internet job boards or Indeed.com, which aggregates thousands of job sites.

And if your competitor is successful, this step can also give you a good idea of where to spend your want-ad money.

5. Make a list.
Large corporations have computer programs and staffs to sort through resumes. But you can do the same thing on a budget. Now that you have a job description for the new position, what are your “must-haves” for the new hire? Make a list. (These are also the criteria you want to include in your job ads.)

Enlist a couple of family members or trusted friends to help you go through the pile, says Kennedy. Be brutal. Any resume that doesn’t have all of the qualifications on the list is set aside. (Go through these later and hang onto any promising leads for future searches.)

If you’re doing this solo, you can set up a macro on MS Word (and some similar programs) to search a document for keywords that you select. This feature can be very useful in scanning through a large number of resumes, says Kennedy, who often uses it himself.

6. Seek out the best employees.
You may be a small fry, but chances are your company can offer some perks that would cause a hardened corporate type to consider an offer. When you advertise or recruit, “sell the small-business environment,” says Kennedy.

Can you offer a more flexible schedule or some work-from-home time? Can an employee bring kids or pets to work from time to time, or work from home if needed? If you don’t offer health insurance, can you pay more to make up the difference?

“If you get good people, you do need to pay them a bit more than competitors because it costs so much to lose them,” says Kennedy.

Other small-business advantages include more hands-on experience and training, and the opportunity to simply do the work without “being bogged down in paperwork,” says Steingold.

7. Don’t try to get something for nothing.
Anyone with jobs to offer these days is in the driver’s seat. But if you overhire and underpay, be prepared to lose your employee in a year or two, when he gets a better offer, says Yate.

One way it can work is if you and your best candidate are willing to acknowledge that the resulting arrangement is likely temporary. In that case, you’re offering a short-term opportunity that will benefit both parties. The critical difference between striking a deal and taking advantage: honesty and attitude.

8. Go hunting.
Is there someone you’ve always wanted to hire? Pick up the phone. Several business owners report that this type of networking often results in an eventual hire, even if it comes years later.

And if your No. 1 choice is intrigued, you might not have to wait at all.

If you’re poaching from direct competitors, it’s “usually not cool if the business owner himself calls,” says Kennedy. Have an employee or close business associate call the person and let them know you’d like to meet for coffee to discuss something important, he says.

9. Use your expertise.
When it comes to interviewing potential candidates, you have an advantage: As a small-business owner, you’ve probably done the job for which you’re hiring. Use that experience when you interview.

Think of some difficult situations you had to navigate. Under the guise of “What would you do if …” ask how the candidate would handle that “hypothetical” situation, says Yate. Since it isn’t the typical interview question, you’ll see how the candidate really thinks.

10. Learn about the person behind the skills.
At a very small business, this employee is going to make up a sizable portion of the staff. That makes it especially important for small-business owners to find someone who will complement (and not clash) with the company culture. And while you may be able to shore up skills, you can’t teach attitude, says Jim Schell, coauthor of “Small Business for Dummies.”

“Anytime you add a person to a small business, it impacts the dynamic of the group,” says Caitlin Friedman, partner in the boutique New York public relations firm YC Media and co-author of “The Girls Guide to Starting Your Own Business.” “One negative attitude or person who doesn’t fit can really throw off the group.”

Schell agrees. At a small company, “having the right person on the bus is probably more important to us,” he says. Because there are fewer employees, “the impact on us when we make a bad decision is more expensive,” Schell says.

11. Don’t oversell.
The one mistake many small-business owners make is that they love their companies and they want everyone else to love them, too, says Jeffrey Fox, author of “How to Make Big Money in Your Own Small Business,”and founder of Fox & Co. But if you want to get someone who lasts beyond the hiring honeymoon, resist the urge to make the position sound like more than it is. “Tell the applicant exactly what the job is about, and what to expect,” he says.

When Fox hired his first few assistants, he noticed they would stay only a short time. He finally realized that he was overstating the day-to-day duties. When the next candidate walked through the door, he dropped the hyperbole. “Then I found someone who has been with me 20 years,” he says.

12. Save money by taking your time.
The mantra of corporate success is “hire slowly, fire quickly,” says Schell. But at small businesses, “we tend to do the opposite,” he says.

That’s a big mistake, he says, especially if you’re watching the bottom line. Adds Schell, “If someone figured out the cost of a bad hire you kept for six months — it’s mind-blowing.”

Written by
Dana Dratch
Personal Finance Writer
Dana Dratch is a personal finance and lifestyle writer who enjoys talking all things money and credit. With a degree in English and writing, she likes asking the questions everyone would ask if they could and sharing the answers — along with smart money management tips from the experts.