Cost of Hiring the Wrong Person: Small Business Owner Edition

When you’re a small business owner resources are sometimes limited and you forgo certain things that larger companies can afford, but doing background check shouldn’t be one of them. Building background checks into your budget is essential and can save you a lot of trouble and money in the end.

According to The Small Business Association replacing an employee who doesn’t work out can cost 50% or more of an individual’s salary. Furthermore, The Wall Street Journal said that 34% of all application forms contain outright lies about experience, education and the ability to perform essential functions of the job. As a small business owner, these statistics can cripple your business, so it pays to have set hiring practices in place so that you can take every precaution to ensure you’re adding the right people to your team.

You are responsible for the people that you bring into your business, and it really hurts when you’ve hired the wrong person and your business suffers for it. Consider a recent case where after driving for a telephone company for only a week, an employee was involved in a traffic accident. The jury learned that the company never saw the employee’s driver’s record which had five traffic tickets within 18 months. They awarded the injured party $550,000. Even with insurance on your business that amount is astronomical and can mean the end to your small business. It’s easy to be swayed by a wolf in sheep’s clothing, it happens all the time, but with a good background check hiring new people or outsourcing freelance opportunities doesn’t have to be so stressful.

Types of checks for freelance Positions

Now that you know that your small business needs to perform background checks, where do you start? There are so many times of background checks that you can perform to ensure that you’re adding the right person to your team. Assessing the position you’re hiring for is essential to performing the right checks and getting the best people on your team.

You can check a person’s

  • Criminal Record
  • Driving Record
  • Credit Report
  • Credentials
  • Education
  • Employment History
  • Sex offender Status
  • Work Eligibility

All of these checks while extremely helpful, they all might not be necessary for every position. For example, if you are hiring someone for an office position doing a background check of his driving record shouldn’t be necessary because driving isn’t part of their job function. You would, however, want to check this same employee’s criminal record to make sure there are no alarming charges on their record, you should also verify their credentials just because they said it doesn’t make it true.

You should be clear about what you want when hiring freelancers, the more specific the better. According to The Department of Commerce 30% of business failures are due to poor hiring practices, don’t be a statistic. Once you’ve defined what you want your ideal candidate to look like, and you’ve interviewed some potential matches, make a list of red flags and unfavorable findings that you don’t want. Then do your background check. Be thorough, be diligent, and protect your brand. A team built on trust can withstand the test of time and propel your business to new heights.


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