Small and medium-sized enterprises (SMEs) are the bedrock of the UK economy, accounting for 99 per cent of all business organisations across Britain. If SMEs are doing well, then in all likelihood, so is the overall economy. Collectively, these companies have significant influence - little wonder when you consider they account for nearly two-thirds of private sector employment.
In many cases, micro companies have great potential to grow and expand. This may be because they offer niche services in a particular area, there is a gap in the market, or they have developed a reputation for excellent service over a number of years. But in order to fully capitalise on the opportunities available to them, small businesses need to hire - and acquire additional manpower. There is only so much one individual can do in one day, and SMEs do not want to turn away work due to lack of capacity.
Is it time to recruit?
If this is the scenario your company finds itself in, it may be time to consider broadening your horizons. Taking on a new member of staff can be daunting for the smallest companies, but if you are already working at full tilt, it is the only way to boost your revenues - other than putting your prices up. Turning away work only serves to boost the competition, as customers are forced to contact a rival operator to get a job done or buy a product they need. So it is very much in SMEs' interests to accept as many contracts as they can.
Taking on an employee, or building up a team of staff, means the company can - theoretically - make money every day throughout the year. Having employees means it is possible for business owners to take days off or even go on holiday without their income stream drying up.
With the UK economy growing and consumer confidence rebounding strongly, there are clear opportunities for business growth at present. Gaps exist in various markets where companies have failed during the economic downturn, and agile SMEs are well-placed to fill the void.
As small enterprises, run by their owner and key decision maker, they are inevitably swifter to act than their larger rivals, which are often weighed down by their own corporate structures. But in order to target additional work and give themselves a chance of growing, SMEs need to have people power - and this means business owners need to think about hiring.
Hiring a member of staff
There are a number of steps employers need to take when hiring a member of staff. As a business leader, you need to decide how much you will pay the individual - consulting the Robert Half Salary Guides may offer some indication as to what is the going rate for professionals in your sector. If your SME is going to struggle to compete with larger organisations on salary, consider whether you can offer other benefits - potentially even equity in the company - in lieu of pay.
Next, you must ensure your preferred candidate is legally entitled to work in the UK. If they are a British or European Union citizen there is no issue - but should they originate from elsewhere in the world they may be subject to the government's points-based immigration test. Organisations may have to do other employment checks as well, to ensure the individual is who they say they are. In some sectors - such as security, health or childcare - it may be necessary to apply for a DBS check (formerly known as a CRB check).
When taking on a member of staff, it is mandatory for businesses to take out employment insurance. SMEs need employers’ liability insurance as soon as they bring in the first member of staff - this is crucial as companies can be fined £2,500 for every day they are not properly insured. Policies must cover the SME for at least £5 million - these will help pay compensation if an employee is injured or becomes ill because of the work they do for you.
As a legal formality, job details - including terms and conditions - need to be sent out to the new employee in writing. You must give any new employee a written statement of employment if they are being taken on for more than one month. Then, finally, you need to register as an employer with HM Revenue & Customs. This can be done up to four weeks before you pay your new staff member.