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What Most New Business Owners Get Wrong About Hiring
By Liliana Hall MONEY RESEARCH COLLECTIVE
New business owners often make costly hiring mistakes. Here’s how to build a smarter process from the start.
Many small businesses start as a team of one.
When you’re focused on getting things off the ground, hiring employees often gets pushed off until the workload becomes unmanageable, leaving little time for a clear strategy.
That’s a problem, because hiring mistakes are expensive. The Society for Human Resource Management estimates that replacing an employee can cost 50% to 200% of their annual salary when you factor in recruiting, onboarding, and lost productivity — a burden that can be especially hard on early-stage businesses.
Taking a more deliberate approach upfront can help you avoid common mistakes. Here are some hiring pitfalls to watch for, and how to avoid them.
Key takeaways
- Don’t wait until you’re overwhelmed to start hiring employees. Rushing to hire can lead to costly mistakes.
- Stop chasing perfection. Focus on the skills and outcomes the role actually requires.
- Expand your search. Using a tool like ZipRecruiter’s “Invite to Apply” can deliver up to 8 times more qualified matches.
Chasing the “perfect” candidate
Too often, business owners focus on finding a “perfect” candidate or a single “unicorn” who can do multiple jobs.
These are common early mistakes, says Katherine Loranger, chief people officer at Safeguard Global, a global workforce management company — and many of them start before the hiring process even begins.
“Great candidates are often overlooked because their resumes didn’t hit every box the employer is looking to check,” she says. In the process, Loranger says, bosses often overlook things like adaptability and transferable knowledge — traits are harder to teach but more valuable in the long run.
Another common mistake is trying to compress too many responsibilities into one role.Early-stage businesses often look for someone who can wear multiple hats — like a marketer who can also make sales calls, or a finance lead who can also handle recruiting.
But Loranger cautions against stuffing too many roles into one position. Instead, define what the role needs to deliver before you start looking for someone to fill it.
Winging the hiring process
For small business owners with limited time and resources, hiring often comes down to a few informal conversations and a coin flip.
That lack of formal structure quietly undermines the entire process, Loranger says.
“Consistency in the hiring process is critical,” Loranger says. “Without a standardized process, you may not be evaluating candidates equally, which not only introduces potential bias, but also may result in missing out on a candidate who would perform well.”
When every candidate is evaluated differently, it becomes harder to compare them. Loranger recommends building structure early, including multiple interviews and perspectives to get more than one opinion.
She also suggests behavior-based questions as a key tool for measuring potential success in a role. Ask candidates how they’ve handled challenges in their current role or how they would approach a specific problem to get insight into how they actually think and operate, not just how they present on paper.
Structure matters on the financial side too. Compensation shapes everything — who applies, who you can realistically afford and whether your offer is strong enough to close. And while it’s easy to treat a budget like an afterthought when you’re scrambling to find help, knowing what you can spend is just as important as knowing what kind of candidate you’re looking for.
Waiting for applicants to come to you
Posting a job online and waiting for resumes to roll in is often the default approach for new business owners, mainly because it feels simple and efficient when time is already stretched thin. But it can limit the quality of candidates who turn out.
The smartest way to review resumes is to bypass the blind inbound inbox debacle and instead, go out and get the exact talent you’re looking for.
Using a proactive tool like ZipRecruiter’s “Invite to Apply” can make a big difference. Employers that make that first move can attract up to 8 times more qualified matches, ZipRecruiter says.
Expanding the search beyond your immediate geography can also widen the pool, especially for roles that don’t require in-office work.
“If you’re relying on applications only, you’re likely missing great candidates with the skills you need to grow your business,” Loranger says. “The best-quality candidates usually aren’t out reading ads and applying for jobs. They are already employed.”
Misusing hiring tools and AI
For small business owners, technology can be a godsend — or a trap. Hiring tools like AI-powered resume screeners, applicant tracking systems and scheduling tools can feel like helpful shortcuts because you can automate the process, save time and move faster.
But hiring experts say over-reliance on digital automation is a mistake unless you’re intentional about how it’s used.
“Hiring is one of the most human decisions a company makes,” Loranger says. “When AI is used too aggressively, especially in screening or interviewing, it can create a disconnected and impersonal experience for candidates.”
The key is targeting friction points, like a clunky scheduling process that’s costing you good candidates. You can fix that with an automated scheduling tool, but anything that requires real judgment shouldn’t be handed off to an algorithm.
Your next great hire is waiting on ZipRecruiter
More from Money:
How to Find Employees with the Right Skills
Hiring? Here’s What to Look for in a Resume
How to Optimize a Job Posting to Attract Quality Candidates
Liliana Hall is an Austin-based reporter for Money, where she covers a range of topics, including financial news, policy, banking, investing, passive income, financial planning and student loan debt. Passionate about accessibility and financial literacy, she’s dedicated to helping readers navigate the complexities of money management and feel empowered to make informed decisions about their financial futures. Previously, Liliana covered all angles of personal finance as a writer and editor at CreditCards.com, Bankrate and CNET. Before she ever wrote about money, she worked in a handful of newsrooms across Austin, Texas, covering everything from the Texas Legislature to SXSW and the 2019 Men’s NCAA Swimming and Diving Championships. Her work has been featured in The Daily Texan, Austin Chronicle and KUT. A Texas native, Liliana graduated from the University of Texas at Austin with a bachelor’s degree in Journalism. When she’s offline, you can probably find her paddle boarding on Lady Bird Lake, riding her moped around town or reading for her book club.