Hiring Your First Employee – A Step into the Next Phase of Growth

3.8.2026

For many entrepreneurs, hiring their first employee is one of the most significant decisions in the company’s history. It often signals that the business has entered its next phase of growth and reached a point where the entrepreneur’s own efforts are no longer sufficient to meet demand or execute growth plans alone.

“Although hiring the first employee brings new responsibilities and obligations, it can – and should – also free up the entrepreneur’s time for other tasks, bring new expertise into the company, and enable the business to develop in entirely new ways. The first recruitment can be one of the best investments in the company’s future”, says Tommi Virkama, Director of Startia.

Start by Defining the Need

Before launching a recruitment process, it is important to take a step back and consider why an employee is needed and what challenge or need the recruitment is intended to address.

Is the goal to:

free up the entrepreneur’s time from customer work to business development?
respond to increased demand?
bring in expertise that the entrepreneur does not have?
enable the development of new products or services?

The more clearly the role is defined, the easier it will be to find the right person for the job. Careful planning also reduces the risk of a poor recruitment decision.

Calculate the Costs Realistically

Hiring an employee involves more than simply paying a monthly salary. In addition to wages, employers must cover various employment-related costs, such as pension contributions, insurance premiums and social security contributions.

“That is why it is important to prepare a realistic budget and assess how much additional revenue or productivity the new employee will need to generate before making the recruitment decision. A good rule of thumb is to ensure that the company’s cash flow can cover the costs of the new employee even during quieter periods”, Virkama reminds.

Many experts recommend setting aside enough funds to cover at least several months of salary expenses in advance.

Remember the Employer’s Obligations

When a company hires its first employee, the entrepreneur becomes an employer. At the same time, a range of different obligations arise.

Employers must, among other things:

prepare an employment contract
arrange earnings-related pension insurance (TyEL)
provide occupational healthcare
take out the necessary insurance policies
handle payroll and mandatory reporting to authorities
monitor working hours and ensure occupational safety
comply with the applicable collective agreement, where relevant.

Many first-time employers are surprised by the number of practical matters involved in being an employer. The good news is that no one has to learn everything alone. Support is available from business advisors, accounting firms, pension insurance providers and occupational healthcare experts.

Recruit Competence – Not a Copy of Yourself

When selecting a first employee, entrepreneurs should also think about the future of their business. Often, the best recruitment is not someone who does everything exactly as the entrepreneur does, but someone who complements the company’s existing skills and expertise.

New perspectives, experiences and strengths can create competitive advantages and open up new opportunities for business development.

“An employee may bring expertise that enables the company to reach entirely new customer groups or develop new services”, emphasises Business Advisor Tuija Räihä-Pundars.

Good Onboarding Pays Off

Employment does not truly begin with the signing of a contract, but with successful onboarding.

“During the first working days, it is important to introduce the employee to the company’s operating methods, goals, customers, tools and safety procedures. The better a new employee understands the business and its objectives, the faster they can create added value for the company”, Räihä-Pundars points out and continues:

“A well-planned onboarding process reduces mistakes, increases motivation and helps the new employee become committed to the company.”

Being an Employer Also Means Being a Leader

Hiring the first employee changes the entrepreneur’s role. In addition to performing operational tasks, the entrepreneur becomes responsible for leading people.

Good employer practices are about more than simply fulfilling legal obligations. They also involve open communication, clear goals, constructive feedback and supporting employee wellbeing.

“A well-managed employee is more satisfied at work, develops professionally and helps the company succeed and achieve its goals”, Virkama concludes.