Who should I hire first? HR or Finance?

Business owners often struggle with when’s the right time to hire help.  My philosophy is you should outsource or delegate anything that someone other than you can do.  This can be a difficult decision to make when you’re a small business owner, and you’re trying to balance your time and your money.  Luckily, HR and finance (or accounting) professionals can help you with both. 

The struggle with hiring finance and human resources professionals is that traditionally these roles have been seen as expenses for businesses.  Until recently, payroll benefits and hiring were seen as costs instead of an investment in the growth of your business.  Finance and HR professionals save business owners time and money and help them grow their business faster by using their training to spot areas the company can be more efficient, identifying ways to use tax and employment laws to your advantage, and helping businesses avoid costly legal mistakes.  

When you’ve just started your business and have no money and no employees, you don’t need to hire an HR professional and an accountant.  When the business starts booming, it’s time to get them involved.  So what do we HR and finance professionals consider booming? Keep reading to find out.  

The Mom & Pop Shop

You don’t need a full-time HR or finance person if you’re making $150,000 or less per year.  You need to consult with both of these people to make sure you are leveraging your business correctly.  Many small business owners pay more taxes than they need to and miss the chance to take advantage of great perks for having employees (even when you’re the only employee).  

Make an appointment with a bookkeeper or accountant to review your financials quarterly, keep up-to-date on tax laws and check in on what you can write off.

You should also hire an HR professional to set up your HR processes before you even hire your first employee at this point.  This will make sure you are compliant and are ready to have the most productive employees.  You should also discuss with your HR what workers comp, unemployment, and group benefits plans can do for you.  

The Easy Roller

Once a company reaches $150,000 per year, it is easy to sit back and think you’ve got everything under control.  Money is coming in the bank, you’re paying your employees, and people are mostly doing their jobs.  Companies get into the most trouble between $150,000 and $4 million.  Hiring and firing employees opens you up to liability.  You have to make decisions about who becomes a W2 employee and who becomes a 1099 worker.  Your books become more complicated as you have different expenses and revenue from multiple sources and accrue tangible assets.  

You need both finance and an HR professional on your team at this point.  I recommend a consultant for both. Consultants will have other clients they are servicing and see trends in finance and HR that are coming your way long before they hit your industry.  They will help you source the resources you need because they are outgrowing their businesses.  Need a loan? Your financial consultant will have lenders they have personal relationships with to get it done.  Need to hire someone, your HR consultant will have a vast network of job seekers and other employers to tap into.  These two professionals will also work together to make sure you are maximizing every dollar you spend.  They will find the best payroll software, CRM, and vendors for your company by pulling their resources together to get the best outcome for you.  

And the red flag, if your accountant says you don’t need an HR or your HR says you don’t need an accountant...get rid of them.  A great accountant and HR professional know that they need one another to get the best results for your business. 

The Industry Giant

When your company reaches $4million or you have more than 150 employees, we’re going to call you a giant (even though under $6million, you’re still considered a small business). 

You’ve found your niche, you’ve spun of products and services, you’ve hired and fired people, and you’ve grown to a point where you are no longer able to run the day-to-day operations on your own.  It’s time to hire your Head of Finance and Head of HR.  

Some business owners chose to put their accountants and HR consultants that grew with them on a retainer.  You can also hire employees to fill these roles. 

Conclusion

All business owners need finance (accounting) and HR help.  So it’s not a matter of which to hire; it’s determining the level of attention your HR and finances need.  Hiring these professionals early will help you ensure that your business is ready for growth and expansion and sustainable for the foreseeable future.