Q&A - Does a start-up or small business need to recruit staff?

Look at the payroll of many start-ups and small businesses and it won’t take you long to count the people. There are over 4.5 million businesses in the UK, and about three-quarters of them don’t employ any staff! That is about 3.3 million businesses that have just one employee – the owner, manager and staff all rolled into one person!

Even if they have ambition to grow the business, lots of start-up entrepreneurs initially work for themselves, taking on the whole variety of jobs, from selling and product development to book-keeping and packaging products.

For an entrepreneur, employing the first few people in a new business is fraught with risk. Make the wrong choices or pay someone too much, and the start-up’s overheads soon increase significantly.

On the other hand there is a temptation for a small business owner to want to do everything himself/herself. This can restrict the growth potential of the business. A successful start-up will soon need people with a variety of skills and experience.

Often the entrepreneur takes the easier option and brings in friends and family to work in the business. Sometimes the new staff are “friends of friends”, next-door neighbours or acquaintances from a local club or group.

In theory that makes those staff “lower risk” appointments, since the people concerned are known to the entrepreneur. It is also much cheaper – no expensive recruitment agency fees to pay or time-consuming and costly job adverts to run in the local newspaper.

However, are they the right or best people for the jobs and work required? Do they have relevant specialist skills? Could problems arise from mixing business with family or pleasure?

The step-change comes when the small business decides to implement a formal recruitment process, looking to attract, select and employ people who are not initially known to the business.