The Employee Shift: From Solo to Staffed and the Impact on Administration

Administration requirements for employees

According to the US Small Business Administration Office of Advocacy, over 80% of small businesses do not have any employees. However, 46.4% of all workers are employed by small businesses.

When you take on even one employee, there is a whole new extra layer of administration complexity to face in your business. Human resources and administrative functions take on newfound significance as compliance with labor laws and maintaining employee satisfaction become integral components in sustaining productivity and company culture.

So why employ people, and what does this mean for your administration and management functions?

Why Take on Employees?

Let’s face it: there are only so many hours in a day, and everything can become overwhelming and limiting for a self-employed business owner. As you start to grow and expand, the decision to employ staff becomes inevitable.

So, let’s explore some of the reasons why a business start-up might consider taking on employees.

  • Skill and Expertise: Employees can bring in skills and expertise that the founders might not possess, which can be crucial for various aspects of the business.
  • Increased Productivity: More hands on deck means more work can be accomplished, potentially increasing productivity and allowing the business to take on more work or larger projects.
  • Business Growth: Hiring employees is often essential for scaling the business, allowing it to grow and expand into new markets or product lines.
  • Focus: Founders can delegate tasks to employees, allowing them to focus on core business activities such as strategy, development, and planning.
  • Diversity: A diverse workforce can bring in a variety of perspectives and ideas, which can be beneficial for problem-solving and innovation.
  • Customer Service: With more employees, a startup can offer better or more personalized customer service, which can differentiate the business from competitors.
  • Operational Necessities: Certain tasks and operations may require a team rather than an individual, such as customer support, sales, or product development.
  • Legal and Regulatory Compliance: As a business grows, it might need dedicated staff to handle compliance with regulations and laws, which can be complex and time-consuming.
  • Competitive Advantage: A skilled and effective workforce can provide a competitive edge in the market by improving the quality of products or services.
  • Continuity and Sustainability: Employees can help ensure that the business continues to operate smoothly in the absence of the founders or key personnel due to sickness, vacation, or unforeseen circumstances.

How Employees Affect Management and Administration

The decision to employ people doesn’t just impact the workforce; it fundamentally alters the dynamics of management and administration within the company.

The introduction of new employees brings about a wave of changes, from restructuring internal processes to fostering a culture that can either propel the business toward prosperity or create unforeseen challenges.

Compliance Issues

With constantly changing regulations and laws, it’s crucial for employers to stay vigilant to avoid potential legal pitfalls. One area of concern is employee classification, as misclassifying workers as independent contractors instead of employees can lead to substantial penalties and legal consequences. Employers must carefully assess the nature of their working relationships and ensure proper classification to comply with labor laws.

Another compliance issue that often arises is related to workplace safety standards. Employers must prioritize creating a safe work environment and ensuring compliance with Occupational Safety and Health Administration (OSHA) regulations. Failure to adhere to these standards puts employees at risk and can result in severe financial implications for businesses through fines and potential lawsuits. Implementing robust safety protocols and regularly conducting training on safety procedures are essential for maintaining compliance.

Overall, navigating compliance issues requires a proactive approach from employers, involving continuous monitoring of regulatory changes, thorough employee classification assessments, and diligent adherence to safety standards. By staying informed on evolving regulations, businesses can mitigate risks and foster a compliant work environment while avoiding costly legal repercussions.

Another critical issue is staying up-to-date with changes in tax laws and regulations at both the federal and state levels. With new legislation affecting employer taxes being introduced regularly, it’s vital for businesses to stay informed to avoid non-compliance. Overlooking these changes could result in audit exposure and potential financial consequences.

Some of the requirements are:

An excellent resource to assist you is

Hiring and Retaining Talent

Hiring the right individuals is essential. The cost of bringing someone new on board is outrageous in today’s economy. Ads, hiring, and training all cost money, and getting an employee to a break-even ROI is not easy.

The first step is to have a meticulously crafted job description that also includes performance expectations (kpi’s).

From there, the process involves carefully screening applications and conducting thorough interviews with your shortlist of candidates.

Your goal is to identify candidates who not only possess the necessary skills to do their job but also share the corporate values and the company’s objectives.

With limited resources and a need for efficient decision-making, small businesses often face the pressure to find the right talent quickly. Small businesses often engage a third party organization that specialize in recruitment.

Another approach that has gained popularity is utilizing social media platforms to reach potential candidates directly. By leveraging the power of LinkedIn, Facebook, and Instagram, small businesses can connect with a diverse pool of talent and showcase their unique company culture.

Involving current team members in the hiring process can result in better long-term fits for the company. By allowing current employees to meet with potential candidates or participate in group interviews, small businesses can gauge technical skills and cultural compatibility. This approach not only helps build stronger teams but also boosts employee morale by making them feel involved in shaping the future of the company.

Ultimately, for small businesses, adapting creative recruitment strategies and involving existing team members can lead to more successful hires and contribute to overall organizational growth.

Building a Winning Culture

A thriving enterprise is built on a strong and vibrant company culture. In small businesses where teams are close-knit, and interactions are close and often, fostering a positive culture becomes even more important. It creates a sense of belonging that encourages teamwork and innovation while boosting employee morale at the same time.

Performance Management and Development

Performance Management and Development is essential for the success of small businesses.

Everyone needs to be evaluated for their work performance. Industry changes so quickly that your business could be left behind if team members don’t grow with their work.

Structured performance reviews and feedback help employees understand their strengths and areas for growth. This not only benefits individual employees but also enhances the overall effectiveness of the organization.


As small businesses evolve from solo endeavors to team-driven enterprises, questions surrounding leadership styles, operational efficiency, and organizational structure become increasingly pertinent. The act of hiring individuals not only necessitates clear communication channels but also demands effective delegation of responsibilities as roles diversify within the organization. While there are complex interdependencies, leveraging human capital profoundly impacts every facet of managing and administrating a small business.


Other articles in this series:
Small Business Administration – Problem or Possibility?
Safeguarding Your Small Business: The Critical Role of Compliance
Navigating the Efficiency Frontier: Streamlined Administration Processes for Small Businesses

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