Hiring for Small Business: 3 Common Mistakes & What to Do Instead
Over the past 3 months, we’ve been talking a lot about hiring for small business. Also, Easter egg: you’re going to spot a theme of 3s in this mini-FAQ. Mark the number 3 as a hiring rule of thumb.
Today’s post will be a quickie conclusion of the series, looking back to the (totally reasonable) mistakes small businesses make when hiring – even when they have experience in it. And I want to reiterate: these misses are common, and if you’ve made them, you’re not alone. Big businesses make them. The most tenured businesses make them. I’ve certainly made them. So without further ado, here they are…
Q: I’m hiring someone I already know and trust. I don’t need to check their references. Right?
A: Wrong. Call their references EVERY time.
Even if you’ve worked with this person before, they were referred by someone you trust, or especially if they’re your friend (I can’t emphasize this one enough), you should conduct a reference check. You’re not just looking for red flags; you’re gathering real-world insight into how this person shows up in different environments, handles challenges, and collaborates or takes direction from others.
We recommend using the questions outlined in this Harvard Business Review guide to structure your reference calls. You’ll get more than surface-level answers, especially if you focus on specifics like:
- What kind of support helped this person thrive?
- They told me about _______ they achieved while working for or with you. Can you walk me through their contribution from your perspective?
- What have you seen them struggle with?
- What management style worked best for them?
- What would you have done differently if you could manage them again?
Hiring for a small business requires a deeper understanding of how someone will fit into your unique culture and day-to-day. Reference checks are the answer to that missing context. This is also an opportunity to get another perspective on any skill or experience gaps you noted during your interview process.
It’s your job to ask the reference challenging questions. Here’s a tip: if you’re only hearing a glowing review, you haven’t asked the right questions. You should be receiving new information that provides helpful, productive insights. Reference checks shouldn’t solely be your candidates’ yes-people.
Personal tidbit: having done this both the right and wrong way, a good reference check is the key to minimal surprises. The moment I (finally) nailed my reference check routine was the moment I started getting a a clearer sense of what to expect from each individual employee.
Q: How much should I budget for a new hire?
A: Salary +10–30%
This number can vary depending on your benefits, taxes, and overhead expenses. Here are line items to account for:
- Employer taxes (Social Security, Medicare, unemployment)
- Health insurance or other benefits
- Retirement
- Equipment, software subscriptions, and tools
- Paid time off
- Payroll costs
This means if you’re offering a $60,000 salary, plan for a total cost of $66,000–$78,000 annually. Knowing the full cost helps you avoid cash flow crunches and ensures you’re ready to truly support the person you’re bringing on without feeling scarce. When you’re calculating the employee’s ROI, base it off the full cost, not just the stated salary.
Q: How long will hiring and onboarding take (from me)?
A: Expect to work 30% more for 3–6 months.
Recruiting and onboarding takes time. A lot of time. In fact, onboarding alone often requires 30% more effort from you or a key team member. Add in the time you spend recruiting and interviewing, and it’s clear that bringing someone on is a full-on investment.
We advise clients to allow 3 months for recruiting. The interviewing and hiring process absolutely shouldn’t last that long, but when you include the recruiting time to get the right people in the door, even a well-run recruitment can be 3 months.
That’s why we always recommend:
- Give someone the ownership over the hiring process (this will be you or a singular person on your team accountable for this result).
- Ensure the job post and recruitment channels are air tight and targeted.
- Clear space in your calendar for onboarding, along with designing the first week + 30-60-90 day plan with scheduled training.
Hiring the right person will save you time in the long run. But in the short term, plan for an uptick in effort, time, and responsibility. If you don’t proactively plan and manage your calendar (and energy) for it, you won’t get the results you’re seeking. When you make the decision to prioritize it and allocate resources to it, and the quality of your results will completely shift.
BTW: once you do this several times and truly convert the process into a system, your required time will go down.
Final Word
Hiring for a small business means wearing multiple hats: recruiter, trainer, leader, manager, and sales person. But with the right expectations, good forecasting, and a solid plan, you can avoid common mistakes and set up your new hire and your business, for long-term success.
