Let’s be honest: starting a business is expensive. Sure, some can operate on a shoestring budget, but for the most part, you need a hefty investment to get up and running, and it makes sense that you don’t want to waste that budget making mistakes or throwing money away.
Yet time after time, new business owners make the same mistakes, and this is exactly what happens.
If you want to avoid this, there are some common pitfalls you need to avoid so you don’t end up in the same trap.
Hiring for Availability, Not Fit
New businesses often fill roles quickly based on who is available at the time they’re hiring, and while this doesn’t always end badly, it can increase the risk of not getting the right people on board when you need them the most to help you start off correctly.
A bad hire costs more than just the salary alone. It’s the recruitment fees, onboarding time, lost productivity during training, etc., not to mention the disruption caused when someone leaves within months. This figure can be a lot more than you initially realise. And studies show the true cost of a bad hire is between one and three times the annual salary of the role. And if you’re a business still finding its feet, that’s a huge amount to have to absorb before you start searching for new hires to cover their position.
Before you post a job, think carefully about exactly the kind of person you need, what skills you require and what exactly you expect of them on a normal day. This will help you pinpoint the right person more effectively to make better hiring decisions.
Skipping Proper Documents and Contracts
Many small businesses start on handshakes, goodwill and verbal agreements in the early days. And initially, this might feel like all you need. But if business progresses, it will become a problem fast. Not to mention the significant legal and financial exposure it creates for you, too.
If employees have no clear contract, they leave the business exposed to dispute over pay, hours, notice periods and responsibilities. Employment tribunals are expensive, time-consuming and damaging to your reputation. This also applies to freelancers and contractors. Misclassification of employment status is one of the most common and expensive errors new businesses make under HMRC’s IR35 rules, and ignorance is no defence.
You can avoid this by either consulting with a solicitor or by using an HR platform to help you create the right contracts and documentation that remove risks before anyone agrees to anything and new relationships are forged.
Not Equipping Staff to Represent the Company Properly
In customer-facing industries especially, you need to be giving your staff what they need to get the job done and represent the company how you need them to. Customers will judge your business based on your staff, how they act and how they look.
This is particularly accurate in hospitality and healthcare where first impressions are everything. A nurse, care worker, or clinic receptionist in a poor-fitting uniform or worn-out workwear signals disorganisation and a lack of attention to the small details, and this will be a negative strike against you. Workwear matters more than you might think, and you need your business to look credible.
This is why you need to work with trusted healthcare scrubs suppliers for your healthcare uniform needs, or with reputable manufacturers for workwear for the industry you operate in, so you can ensure that you and your team are giving out the right impression at all times.
Underestimating Onboarding
Onboarding is about more than having someone sign a contract, showing them where the kettle is and leaving them to get on with it.
In reality, how a business integrates a new hire determines how quickly they become productive and how long they stay, as well as their ability to represent the company properly.
Poor onboarding, however, leads to disengagement within weeks. Employees end up feeling unsupported and leave quickly; then the hiring process starts again. But structured onboarding can help improve retention by up to 80%.
You need a simple one-week plan built before your new hire is even selected. You need to make sure you cover admin, introductions, the reality of day-to-day life within the company, you need to cover processes, tools, and by the end of the week, the new hire has to have a complete picture of the company, what you do and where they fit in, as well as what is expected of them.
Overpaying for Roles
Early hires can often come with inflated job roles and salaries because founders want to attract talent. But the result is a struggling payroll that doesn’t match where the business currently is.
You need to spend some time defining job roles and salary bands. You need to understand what you need right now to get operational, not what you aspire to be down the line.
Then you need to match the salary accordingly. If required, you can have a clear progression pathway so people can evolve in the job role. But the main aim is to hire for what you need now, not what the future company needs before you get there.
Neglecting Retention
But why do you need to think about retention if you’re only just taking on new hires?
Because if you do this, you’re automatically building a better culture and working environment. Starting with retention before you hire means you can employ those who can see your vision.
You can create a workforce that benefits the company and the employees and allows you to record and track the details that matter the most. Retention is about ensuring the employees you do hire are equipped to do a great job, that they feel supported, and become an invaluable member of the company, and doing this proactively from the beginning often costs very little. Especially compared to the recruitment costs to replace those who leave after short periods.
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