Hiring your first employee
Your first hire is one of the biggest steps a small business takes. Done well, it frees you to grow; done in a rush, it's expensive and stressful. Here's how to decide whether you need an employee at all, what to plan for, and how to set your first hire up to succeed.
In short
- Hire when there's steady work you shouldn't be doing yourself, not just a busy month.
- Consider the alternatives first - a contractor, outsourcing a function, or AI tools and agents for routine tasks.
- Budget for the full cost of an employee, not just the wage, and check your cash flow can carry it through a quiet patch.
- Write down the role, the outcomes you expect, and how you'll measure them before you advertise.
- Plan the first week and the first three months in advance. Most early problems come from unclear expectations.
Are you ready to hire?
Signs it might be time:
- You’re regularly turning work away or letting customers wait too long.
- You spend hours on tasks someone else could do well and more cheaply, while the work only you can do slips.
- The extra workload has lasted months, not weeks, and your pipeline suggests it will continue.
- Your cash flow can carry the cost for at least a few months, even if sales dip.
Signs to wait:
- The busy period is seasonal or one big job.
- You haven’t yet worked out exactly what you’d hand over.
- Cash is already tight. A new wage won’t fix that; more sales or better pricing might.
Consider the alternatives first
An employee isn’t the only way to get help:
| Option | Good for | Watch out for |
|---|---|---|
| Employee (part-time, full-time or casual) | Ongoing core work, building skills and loyalty | Ongoing cost and obligations; management time |
| Contractor or freelancer | Specialist or project work, variable workloads | They must genuinely be running their own business, not an employee in disguise |
| Outsourced service | Whole functions like bookkeeping, IT, marketing or reception | Less control; check quality and contracts |
| AI tools and AI agents | Routine, rules-based tasks such as drafting, scheduling, answering common questions, chasing invoices | Need setup and checking; not a substitute for judgement or relationships |
Our guides to outsourcing and freelancers and using AI tools in a small business go deeper.
“AI employees”: what AI agents can and can’t do
AI agents can now handle some tasks that once justified a part-time hire: answering routine enquiries on your website, booking appointments, sorting email, preparing quotes from templates, or following up unpaid invoices. For a small business, that can delay the need for a first hire, or let your first hire focus on work that needs a person.
But an AI agent can’t build relationships with customers, use judgement in unusual situations, or take responsibility. Start it on low-stakes tasks, limit what it can access, keep a person in charge of anything it sends to customers, and check its work regularly. Many businesses find the best result is a person and AI tools, rather than one instead of the other.
Plan the full cost
An employee costs more than their wage. When you budget, include:
- Wages, including any penalty rates or overtime that apply to the role.
- Superannuation on top of wages.
- Insurance, including workers compensation.
- Leave (for permanent employees), when you’re paying for time not worked.
- Equipment, tools, vehicle, uniform and software licences.
- Recruitment and training costs.
- Your time to recruit, train and manage, especially in the first months.
Add these to your cash flow forecast and check the business can still pay everyone, including you, through a slower month.
Employing someone comes with legal obligations, from minimum pay rates to tax, super and safety. business.gov.au’s Guide to hiring employees and the Fair Work Ombudsman walk you through them step by step. Talk to your accountant or bookkeeper before the first pay run.
Define the role before you advertise
Write a one-page role description:
- Purpose: why the role exists, in one sentence.
- Main responsibilities: five to eight things they’ll do.
- Outcomes: what “doing a great job” looks like after three months.
- Skills and qualities: what’s essential, and what’s nice to have.
- Hours, location and type: full-time, part-time or casual; on site, remote or hybrid.
The clearer this is, the easier it is to advertise, choose fairly and manage the person once they start.
Finding and choosing the right person
- Look in the right places: your own network and customers, local community groups, industry associations, job boards, and TAFE or university job boards for trainees.
- Write an honest ad: what the job involves, what you offer, and what’s great about working with you. Small businesses can offer flexibility, variety and responsibility that big employers can’t.
- Shortlist on the essentials from your role description.
- Interview with the same questions for every candidate, plus a practical task where possible.
- Check references, and check any licences or qualifications the role needs, and that they have the right to work in Australia.
Our guide to recruitment covers each step in detail.
The first week, and the first three months
Most problems with a first employee come from unclear expectations, not from hiring the wrong person.
Before day one - Prepare their workspace, equipment, logins and any paperwork. - Plan their first week, hour by hour for the first day. - Tell customers and suppliers who they’ll be dealing with.
Week one - Welcome them properly, and introduce them to how the business works and why. - Cover safety, your systems, your service standards and who to ask for help. - Give them a real, achievable task in the first few days.
The first three months - Agree on goals for the first 30, 60 and 90 days. - Meet weekly for 15–30 minutes: what’s going well, what’s hard, what’s next. - Give feedback early and often, both positive and corrective. - At three months, review together against the outcomes in the role description.
business.gov.au has an onboarding checklist you can adapt. See also Managing a team.