handmade success

How to hire staff for your small manufacturing business

As your small business grows, you may need to employ staff to handle the extra load. Here's how to get started with the hiring process.

It’s difficult to know exactly when you should consider hiring staff to help you with your small business - engaging employees too early can lead to cash flow issues; whereas leaving it too late can result in major burnout. Wherever you are in your business journey, it’s important to take some time to understand your options so that you can have the right people in place at the right time when you are ready.

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Types of Employment

It’s firstly a good idea to familiarise yourself with the types of employment options you have. Help can come in multiple forms, including full-time, part-time, freelance/contract based, and interns. You can mix and match these employment structures for each of your hires depending on the tasks you need them to do.

Casual Employment

This type of employment is great for situations where you don’t know how much help you need and when. It provides you with flexibility around the hours you need them to work, and you’ll be able to terminate employment arrangements reasonably quickly if you no longer require their services.

You will however, tend to pay more for a casual team member compared to a permanent one. Although casual staff do not receive paid leave entitlements, they need to be provided with casual loading, usually around 25%. You’ll also need to provide your casual workforce with a casual employment contract: this is a document that sets out the rights and expectations of both parties.

If you provide your casual with regular, ongoing work, you’ll want to keep in mind that your staff member may be entitled at some point to request that their employment is converted to permanent. It’s wise to thus regularly review the hours each of your employees are working so you are ready for this situation if it occurs - there have been many court cases in recent history where employers were directed to back pay permanent entitlements to staff they previously considered as casual.

Permanent Employment

This style of employment engages a staff member either full-time or part time. It’s great for situations where you need help on an ongoing basis for a specific number of hours a week.

Permanent Part-Time is someone who doesn’t meet the requirements for full-time, which is typically around 40 hours a week.

All permanent employees are entitled to paid leave entitlements - these include annual leave and personal leave, so you’ll be paying your staff on days that they will not be in the office or workshop. It’s more difficult to fire a permanent staff member as there are more obligations to fulfill; however, as you are providing more job security, this often comes with a more motivated and dedicated workforce invested in your business’s future success.

Freelance Employment

Freelance is another consideration and is great for tasks that you need done on an ad-hoc basis - for example, product photography, SEO consultancy or bookkeeping. Instead of bringing someone with these skills in-house as an employee, you might consider engaging a freelancer to undertake the work.

You can also consider virtual services. These services can be either one-time services or hourly services. Online service platforms such as Fiverr and Upwork can help you get quick, efficient and effective help for your business.

See our blog post on How to hire a virtual assistant for your Etsy store for more ideas on utilising this style of employment.

How to Hire

Now that you know what employment style you are likely to be hiring under, the next step is to do some research to understand what to offer your prospective staff.

For casual staff, you’ll usually need to offer an hourly or daily rate (i.e. $20/hr). For permanent staff, their total renumeration is usually calculated on an annual basis (i.e. $19,000) and should include all loading entitlements. Additional benefits can be included as part of their package such as bonuses for performance, allowances for travel, tools and equipment stipends etc.

Freelancers will usually quote their rate when asked: it’s possible to negotiate on this somewhat from here, especially if there is the prospect of future work.

For all types of employment, you’ll want to find a rate that matches both market expectation and your budget - offering a rate too low will lead to less experienced candidates that may cost you more in the long run: they often will need more training and “hand-holding” before they are able to work independently. Offering a rate outside of your budget can lead to cashflow stress and high expectations that may not be fully met. It’s important to spend some time on ensuring you are comfortable with the rate of pay on offer as it will make selecting suitable candidates much easier.

Identifying personality fit

Before hiring someone, you should go through an interview process to identify a relationship and personality fit between you and the candidate. It is crucial that you know what you want in your hiring staff. This means thinking about the job description and your needs. Before listing a job, think about what your business needs and what attributes you prefer in a candidate. You can do this by listing what you would like in an ideal employee and how they can better improve your business.

As hiring an employee is crucial to how your business will do in the future, you shouldn’t try to rush this hiring process. Give yourself ample time to create a plan and get to know your candidates before hiring one. During the hiring process, you should ask candidates specific questions to better understand them and their work ethic.

During this stage of hiring, impressing your candidates is as important as them impressing you. During the interview, provide lots of information about your business and their job scope to understand what they expect out of the job on offer. Allow them the chance to ask questions about the business, these questions may also help you pick out your ideal candidate.

Making the offer

Once you have decided on the candidate you’d like to engage, you’ll want to provide them with an offer of employment. This usually takes the form of a letter (or more recently an email) with details on the job role, the rate you are offering and any particular terms (i.e. specific times you’d like them to work).

Your new employee!

Once they have accepted, you’ll want to draw up a employment contract that formalizes the role description and terms that you have agreed to. You can usually use a default contract for most situations without needing to go to a legal adviser. There are many available on the internet, interchangeably referred to as an “Employment Agreement”, “Contract of Employment”, “Employee Contract” or a “Job Contract”.

Once the contracts are signed and you have agreed on a start date, you now have a new employee! In our next blog post, we’ll cover the next steps for onboarding your new staff member to ensure that they become a valuable member of your team.

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.