When you first start a business, it’s normal to do everything yourself. From winning work and delivering services to handling admin, finances, and customer enquiries, wearing multiple hats keeps costs low and gives you full control.
However, as your business grows, there often comes a point where doing everything alone becomes a limitation rather than a strength. What once felt manageable can quickly turn into long hours, missed opportunities, and mounting pressure.
Hiring your first employee is a major milestone for any small business. Done at the right time, it can free up your capacity, improve service quality, and support sustainable growth. Done too early, it can put unnecessary strain on cash flow. Knowing when the timing is right is key.
Signs You’re Ready to Hire Your First Employee
One of the clearest indicators that it may be time to hire is when you are consistently turning down work. If enquiries are coming in but you don’t have the capacity to take them on, you are effectively limiting your own growth. Bringing in an employee can allow you to accept more work and increase revenue rather than letting opportunities pass by.
Another common sign is spending too much time on admin or low-value tasks. If your evenings and weekends are regularly taken up with emails, bookkeeping, scheduling, or general admin, it may be more efficient to delegate. Your time is often better spent on strategy, client relationships, and developing the business rather than on tasks that could be handled by someone else.
A decline in service quality is also a warning sign. If deadlines are being missed, communication is slipping, or standards are harder to maintain, additional support may be needed. Protecting your reputation is critical, especially as your business grows, and having help in place can ensure consistency.
Revenue is another important factor. While there is no universal number, many businesses find that once they are generating consistent turnover of around £80,000 to £100,000 or more, hiring becomes a realistic option. At this stage, an employee can often pay for themselves by increasing capacity or efficiency.
Can Your Business Afford to Hire?
Affording an employee is about more than just paying a salary. Employers also need to budget for National Insurance contributions, pension auto-enrolment, holiday pay, and potentially sick pay. There may also be costs for training, equipment, software licences, and workspace.
A helpful way to assess affordability is to consider whether the employee will generate additional income or free up enough of your time to do so. As a general guide, many businesses aim for an employee to create two to three times their total cost in added value, whether through increased revenue, improved productivity, or reduced pressure on the owner.
Cash flow forecasting is essential before making any hiring decision. Being confident that your business can comfortably cover employment costs during quieter periods helps reduce risk and stress.
Alternatives to Hiring an Employee
If you are not quite ready to commit to a full-time employee, there are alternatives worth considering. Freelancers or contractors can provide support for specific projects without the long-term commitment. Virtual assistants are often a cost-effective way to manage admin and customer enquiries. Outsourcing tasks such as payroll, bookkeeping, or marketing can also free up time while keeping costs flexible.
These options can act as a stepping stone, allowing your business to grow until hiring an employee becomes a more secure decision.
Preparing for Your First Hire
Once you decide the time is right, preparation is key. You will need to register as an employer with HMRC and ensure payroll is set up correctly. Putting employment contracts and basic policies in place helps protect both you and your employee.
It’s also important to think carefully about the role itself. The first hire should ideally remove the biggest bottleneck in your business, whether that is admin, delivery, or customer support. Being clear about responsibilities and expectations from the start sets the foundations for a successful working relationship.
Key Takeaways
The right time to hire your first employee often comes when the workload is consistently high, opportunities are being missed, or service quality is at risk. Affordability should be assessed using total employment costs, not just salary, and alternatives such as freelancers or outsourcing can be useful if you are not ready for a permanent hire. With the right planning, your first employee can be a catalyst for growth rather than a financial burden.
Hiring is a big step, but with the right preparation and financial insight, it can be one of the most positive decisions you make for your business. Contact us if you would like to discuss this further.
