Hiring the first employee in a trade business

A sole trader who hires is not simply adding a pair of hands. They are taking on a fixed cost that arrives every week regardless of the work.

That change is larger than any later hire, because it is the first time the business must earn before it can pay.

The wage is roughly two thirds of the cost

On top of the hourly rate sit superannuation, insurance, leave accruing quietly, tools, clothing, phone and a share of the vehicle.

A business pricing labour at the bare wage underprices every job that person touches. The loaded figure is the one that belongs in a quote.

The first months are not productive

A new employee learns the systems, the customers and the way this business does things. A qualified tradesperson still needs weeks; an apprentice needs a year.

Budgeting for that period is what separates a hire that works from one abandoned in month three. Expecting full output in week one guarantees disappointment on both sides.

Decide what the owner stops doing

A hire that simply doubles the tools on site leaves the owner still quoting at nine at night. Nothing improved except the volume.

The useful question is which work the new person inherits. Usually it is the repetitive site work, so the owner can quote, plan and invoice in daylight.

Work has to exist before the person does

Hiring into a hope is how a business ends up carrying a wage through a quiet month. A pipeline of accepted quotes is the signal; a busy fortnight is not.

Our guide to a cashflow forecast covers seeing eight weeks ahead, which is the minimum view before adding a wage.

Write down how this business works

A sole trader carries the standard in their head. An employee cannot read it, so the standard becomes whatever they did last.

A short written description of a finished job, how a site is left and what goes on the paperwork does most of the training. It takes an evening and saves months.

Records start on day one, not at the first problem

Hours, start dates, agreed rates, tickets and licences all matter later, and reconstructing them is unpleasant.

Capturing hours against jobs from the first week also tells you whether the hire is paying. Our guide to checking in at the job covers doing that without a timesheet.

Measure the hire against the jobs, after a quarter

The question is not whether the person is busy. It is whether the business bills more, after the wage and the on costs.

Three months of hours against jobs answers it. A hire that has not moved the billing needs different work rather than more encouragement.

A second person changes the quoting, not just the doing

Two people on a job halve the days but rarely halve the hours. Some tasks take two and some cannot be shared at all.

A quote built by dividing a one person estimate in half loses money on every job where the work does not split.

The first hire is also a supervision cost

An employee on another site still needs checking, answering and occasionally rescuing. That time comes out of the owner's day.

Businesses that plan for it stay calm. Businesses that assume independence from week one end up doing two jobs badly.

Our guide to supervising an apprentice covers the check points that cost least and catch most.

What to change first

• Labour prices at the loaded cost, not the bare wage
• The first weeks carry an expected cost rather than an expected output
• The owner names which work moves across, and stops doing it
• Accepted quotes, not a busy fortnight, justify the wage
• An evening writing down the standard replaces months of correcting
• Hours record against jobs from week one