Hiring the first employee is surely the most dreaded leap into the unknown for all project leaders when they feel that the time has come to to develop the start-up.

This step is both exciting and challenging. And if the new recruit incompetent? What if they quit? What if you are a bad manager? In the midst of all these dilemmas, one of the questions that clears the fog the most is this: Is this the right time to to hire ?

On the one hand, if you hire too early, you risk having problems with cash flowand the added stress of management.

On the other hand, if you hire too late, you risk missing the critical moment in the market for your project's release, or be overwhelmed with work that you can't accomplish.

As in all areas of life and business, there is no single answer. However, this article will provide you with some guidelines for dealing with the thorny issue of first hire. An essential point to address in order to start the year 2023with success, productivity and efficiency!

Why is the first hire key? 

Your first hire has many implications for the future of your business, making it a major step to take seriously. 

First, you must realize that the arrival of your first employee will have an impact on the culture of your company. You will no longer be the only one involved in the running of your company and will have to assume that someone else can represent the product or service you sell. 

The choice of this person becomes decisive because the image of your company will also become the business of your employee who will have responsibilities and power of action on what you put so much effort to create when you were the only one in charge. 

Secondly, this employee, and you will surely hire him/her for this as well, will be able to be force of proposal as to the long term vision he/she wants his/her new company to take. 

Therefore, several options are open to you. Do you want someone who is totally aligned with your values, culture and operating methods to move more quickly in your direction? 

And finally, the first hiring is key because it implies significant changes in the financial structure with the logical sharing of shares in the company in proportion to the involvement of your employee. This sharing should certainly not be taken lightly. 

When is the right time to hire your first employee? 

When the company has enough cash

Employees are assets that add financial value to your company. However, employees need time to be operational and to adapt to their role. This time has a cost and implies the mobilization of resources necessary to achieve it, so many constraints to take into account for your company.

It is therefore important to provide sufficient income to cover not only the cost of the new employee, but also the indirect costs of training and start-up time.

What is sufficient income? You need to "set aside" at least twice the monthly salary cost of the new income you are securing in the month you hire your new staff. This income provides a buffer to cover costs, plus a few others.

When the company needs to grow

You know it's the right time to hire your first employee when it's the only way to grow your business

Indeed, when you get to the point where you have no choice but to turn down an opportunity because you don't have enough manpower to fulfill the assignment, it's time to hire someone.

Hiring as soon as possible will allow you to avoid the fateful moment of refusing a contract due to lack of manpower, which will greatly harm your company' s image . Your company could be seen as immature and not structured enough to handle a high rate of activity. 

By focusing on early recruitment, you will be forced to determine and articulate your company's mission, vision and values from the start. This clarity will help you attract the right people to your company and thus grow your business very quickly and in the right way from the start. 

Hire or take on a freelance provider? 

More than two million skilled professionals have turned to freelancing in the past two years. So what should you choose between a traditional hire and a freelance provider for your first employee?

Why do companies hire freelancers?

The first reason is profitability. The flexibility that a freelance employee offers you is excellent in terms of increasing or decreasing the size of your project depending on its nature and results. 

Second, access to specialized skills. In a dynamic of project-based work, the use of the interim market allows companies to call upon specific skills that are not available internally for a fixed period of time.

Finally, quick accessibility. The nature of temp-to-hire means you have an immediate and transient workforce. The short notice periods and project durations these temps work on are definite assets.

Why do companies hire permanent employees?

When hiring permanent employees, companies are primarily looking for stability. Indeed, as organizations begin to reach a steady level of growth, permanent employees are useful in establishing consistent processes over time in all areas of the business. 

Building a harmonious company culture isthe second reason. This is what many consider the social investments that are made when building permanent teams - these are critical decisions and are an important part of your recruitment planning and what you are looking to build and achieve. 

Finally, hiring on a long-term basis allows for a more refined understanding of requirements. As each position in an organization has its own importance and processes, people working on a permanent basis will be in a better position to know their role and the expectations that come with it. 

What to choose now? 

As you can probably imagine, the best and most appropriate approach to take is the one that combines both forms of labor in your organization. 

How to declare your first employee? 

You must declare the hiring of your first employee by means of the declaration prior to hiring (DPAE) within 8 days before the date of hiring.

When you make this DPAE for your first employee, the Urssaf will automatically give you an employer account number, but be aware that you will also keep your freelance account number.

If applicable, as a liberal professional becoming an employer, you must inform the employment services of any change in the company's situation or activity: transfer, change of activity, etc.

In addition, any employer who falls within the scope of the unemployment insurance scheme must join the scheme when hiring their first employee, by sending a membership form to Pôle emploi.

Regardless of the date of completion of the declaration formalities, membership takes effect on the date of hiring of the first employee. You are deemed to have fulfilled this obligation by completing the pre-registration declaration.

What are the hiring incentives in 2022? 

At the time of writing this article, there are a number of hiring aids available to companies wishing to recruit staff. They are listed below but you can find them in detail in this section. 

Assistance in concluding an apprenticeship contract 

In the context of the health crisis, special temporary assistance has been created to encourage employers to enter into apprenticeship contracts between July 1, 2020 and December 31, 2022.

It amounts to €5,000 for the hiring of minors and €8,000 for adults.

Assistance in concluding a professionalization contract 

Benefits in kind can be deducted from the student' s salary up to 75% of the deductions allowed for other employees, and all professionalization contracts are exempt from social security charges as part of the general reduction in extended contributions.

In addition, a flat-rate aid for the hiring of a job seeker aged 26 and over of up to €2,000 is provided by Pôle Emploi and another is paid by the State for the hiring of a job seeker aged 45 and over (€2,000 maximum) - being cumulative with the Pôle Emploi aid.

Karmen, to help you generate cash! 

Despite the existence of these numerous hiring aids, we still come back to the first point: you must have enough cash before embarking on a process of recruiting employees. 

For this, don't hesitate to turn to cash flow specialists like those who make up the Karmen team.

Karmen financing steps
Karmen Funding Steps

Through its Karmen Grow tool, Karmen democratizes the use of Revenue Based Financing, which we have detailed here to generate innovative, fast, non-dilutive and totally transparent cash flows for your SaaS or e-commerce business. 

The company Karmen has just raised 50 million euros.

For 2023, Karmen' s ambition is to continue to support digital players in a tougher economic context where traditional financing is drying up in favor of non-dilutive financing.

In conclusion, hiring your first employee is a decision with many major implications for the future of your business. 

Don't neglect the learning stage before making such a decision, as it can ultimately prove to be extremely beneficial if it is well thought out and justified by tangible reasons.