Scaling Up: The leap from sole trader to 'micro business' could unlock over one million jobs

Scaling Up: The leap from sole trader to 'micro business' could unlock over one million jobs

In a pandemic world where unemployment figures continue to climb, it is unusual to hear entrepreneurs talking about taking on additional overheads and responsibilities.

During the initial covid outbreak phase (when people were fighting over loo paper) almost every single entrepreneur in my network was bracing themselves for the worst.

Fast-forward a few months, and the majority of business owners I've caught up with with have done exceptionally well. Their dialogue changed from "I'm going to lose everything I have built," to "I can't keep up with the output and my deadlines."

And as a result of this unexpected boom, quite a few sole traders I know have had to place potential clients on waiting lists - which doesn't sound like a bad thing until you realise you're putting someone out of a job and missing an opportunity to scale up!

According to the ABS, 61 per cent of Australian businesses by number are sole-traders with no employees, which rounds up to close to 1.3 million.

Imagine if each of those business operators took on one employee each? We could all play a part in creating 1.3 million new jobs!

Like most things, thats easier said than done because for sole traders, there is a lot of fear around taking on an employee.

To learn more about this fear, and the process involved in making the first hire, I spoke with my friend and client, Black Wolf Consulting HR and recruitment expert Tanya Abbey.

Here is what I found out:

When is someone ready to take on their first employee?

As Tanya explained to me, it depends on the service and the output, but most business owners are ready to take on their first hire in the first one to two years.

She said the story tends to follow along the lines of a successful first year: "You've built your business and getting some really good headway. Next, customers are ramping up and creating a great referral base," said Tanya.

"It's here, that without additional hands, you may have customers placed on wait lists.

"When you're ready to look at hiring, you might reach out to a friend or family member and think, 'they're going to work as hard as me, it's going to be awesome and we're never going to fight'."

Tanya said these are often famous last words.

"Remember anyone you hire will not have the same output as you, because they're not the business owner. There are very different motivators at play here," she said.

In her own business, Tanya will usually hire when the quality of work starts to slip.

"I always hire if I feel there is quality lacking. Difficulty getting back to a client or consultant, or struggling to meet deadlines, is a clear indicator to increase resources," she said.

"Often you'll need help before you realise it, so you should always be thinking of hiring and have the thought in the back of your mind when talking to people, because it can take up to a month to secure."

What is a sole-trader's biggest fear around hiring their first employee?

From her own personal experience building Black Wolf Consulting almost eight years ago, Tanya knows what this fear feels like and she's also placed thousands of successful candidates into other peoples businesses too.

"The biggest roadblock can be that first hire but once you go through the process, you'll find you roll on with confidence from there," she said.

"Obvious considerations like money, and understanding what to do in terms of super and work cover, can be overwhelming. On a deeper level though, there is the fear that an employee can't replicate or do what you do so well.

"For professional services, your business is essentially you. Clients come to you not just for the service you provide - it's also you as a person," said Tanya.

But be warned, you can't be replicated, so Tanya's advice is to look for a support person who brings their own skillset and strengths to your business.

"The ultimate goal of the first hire is to free you up, so you can keep being you," she said.

Should a sole trader recruit for themselves? What are the benefits for going through a recruiter?

As an example, Tanya said that for a professional services role, a recruiter will initially screen about 30 people before moving onto phone screening and then interviewing between 10 and 15 candidates before cutting those down to the top three. 

She said to think about the time it might take you to go through the entire application to interview process.

"For us interviews take anywhere between half an hour to an hour, then add this to all the resumes to go through, plus writing the ads, putting the ad up on Seek, downloading the applications it's a lot of time."

"Plus most business owners are sole traders, their time is worth so much more than sifting through applications," she said adding "When you look at the cost of using a recruiter versus the cost of a bad hire, it almost cancels itself out in the first couple of weeks."

If hiring a recruiter, Tanya suggests asking where they have recruited in a similar space and if they have recruited for competitors.

"Ask what types of roles have they recruited for in the past and how many years experience do they have? You'll want a considered approach to ensure the recruiter understands your business culture and desired outcomes,"  she said.

"Find out how long they've been with their agency too."

Tanya said recruiters can have a tendency to jump from job to job every three to six months.

"It can be very transactional. At Black Wolf, we value longevity in recruiting. Something that we say is that we are not a provider, we are a partner."

About the Author: Amanda Williams has 10 years of industry experience in communications across politics and small business. She is the founder of Yellowpanda, a boutique consultancy raising the profiles and visibility of CEOs while delivering tangible results to their bottom line.

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