When Is the Right Time to Hire?
Hiring your first employee is one of the biggest decisions you will make as a small business owner. Hire too early and you strain your cash flow. Wait too long and you limit your growth or burn yourself out. Here are five signs the time is right.
1. You Are Consistently Turning Down Work
If you are regularly saying no to new clients or projects because you simply do not have the capacity to take them on, that is the clearest signal that your business has outgrown a one-person operation. Every job you turn down is revenue lost and potentially a customer who goes to a competitor and stays there.
2. You Are Working More Than 50 Hours a Week Consistently
Working long hours during a busy period is normal. Working 60-hour weeks every week for months is not sustainable — and the quality of your work will eventually suffer. If you cannot take a sick day without the business grinding to a halt, you are overdue for help.
3. You Have Consistent, Predictable Revenue
Hiring becomes much less risky when your revenue is stable and predictable enough to cover the additional cost with room to spare. As a rough guide, you should be confident that the revenue generated or freed up by having an employee will more than cover their total cost — salary, superannuation, workers compensation insurance, and any equipment or training they need.
4. You Are Spending Time on Tasks Below Your Hourly Rate
If you are billing clients at $150 per hour but spending several hours a week on bookkeeping, admin, or tasks that could be done by someone at $30 an hour, the maths are simple. Hiring someone for the lower-value tasks frees you up to do more of the high-value work.
5. You Have Work That Can Be Delegated
Not all businesses are ready to hire even when they are busy. If every task in your business requires your specific expertise or customer relationship, you may need to systematise and document your processes before hiring is feasible. The question is not just "do I have enough work?" but "do I have work someone else can do?"
Before You Hire: What You Need to Have in Place
Taking on an employee comes with legal and administrative obligations. Before you make an offer, make sure you have:
- Registered as an employer with the ATO so you can withhold PAYG tax and pay super
- Workers compensation insurance — mandatory in all states and territories
- A written employment contract that complies with the relevant Modern Award or enterprise agreement
- An understanding of the relevant Modern Award for your industry, which sets minimum pay rates, penalty rates, and entitlements
- A basic onboarding process so your new employee can actually learn the job
Fair Work Australia (fairwork.gov.au) is the best starting point for understanding your obligations as an employer. Their Pay and Conditions Tool can tell you the minimum rates that apply to your business.
Start With Part-Time or Casual
If you are not ready for the commitment of a full-time employee, starting with a part-time or casual arrangement lets you test the relationship and the demand before making a larger commitment. Many strong long-term employment relationships start with a casual arrangement that grows as the business grows.