3 Signs It’s Time to Hire Your First Employee

Making your first hire is one of the biggest milestones in any business journey. It’s that moment when you transition from being a solo entrepreneur to becoming an actual employer. But knowing when to hire first employee can be one of the most challenging decisions you’ll face as a business owner.

Many business owners fall into two camps: those who hire too early and burn through their cash reserves, and those who wait too long and burn themselves out trying to do everything alone. The sweet spot for when to hire first employee lies somewhere in between, and there are clear signals that indicate when you’re ready.

After speaking with dozens of successful entrepreneurs and analysing hiring patterns across industries, three key signs consistently emerge that signal when to hire first employee for your growing business.

Sign 1: You’re Drowning in Low-Value Tasks

The first and most obvious sign is when you’re spending more time working in your business than on your business. If you’re constantly juggling admin work, data entry, social media posts, and basic customer service whilst trying to land new clients and develop your strategy, something’s got to give.

Ask yourself: what’s your hourly value? If you can earn a high rate consulting but you’re spending 10 hours a week doing low-value admin tasks, you’re effectively losing significant income every week. The opportunity cost adds up quickly over a year.

The maths is simple: If hiring someone frees up 20 hours per week for you to focus on high-value activities, the potential return far outweighs the salary cost. Even accounting for training time and management overhead, the numbers work strongly in your favour.

Signs you’re drowning in low value work:

• Missing deadlines on important projects
• Feeling constantly stressed and overwhelmed
• Working evenings and weekends just to keep up
• Putting off business development activities
• Customer service quality starting to slip

As one successful entrepreneur puts it: “The minute you start making consistent revenue and you’ve proven the business works, that’s when you start hiring people.”

Sign 2: Financial Readiness

This might seem obvious, but many entrepreneurs either hire before they can afford it or wait until they’re drowning in work. Understanding when to hire first employee from a financial perspective requires having predictable revenue plus a financial buffer.

Here’s what financial readiness actually looks like:

Revenue Requirements:

• 3-6 months of salary costs in the bank
• Consistent monthly revenue that covers the hire plus 40-80% additional costs
• Proven business model with repeatable sales processes

The Real Cost Breakdown:

• Base salary (research local market rates)
• Payroll taxes and social contributions
• Benefits and pension contributions
• Holiday pay and sick leave
• Equipment and training costs
• Recruitment and onboarding expenses

Total first year cost: Expect to budget 40 to 80% above the base salary for additional costs.

The golden rule? You should be able to afford the hire for at least six months, even if revenue dipped by 30%. This isn’t being overly cautious (it’s being realistic about the time it takes for a new employee to become fully productive and the inevitable bumps that come with growing a business).

Sign 3: You’ve Identified a Specific Skills Gap That’s Holding You Back

The third sign is when you can clearly identify tasks that either:

• You’re terrible at
• You actively hate doing
• Require expertise you don’t have
• Are preventing business growth

This isn’t about hiring someone to do everything you don’t fancy doing. It’s about strategic hiring that either saves you money, makes you money, or enables you to make more money.

As entrepreneur Patrick Bet-David puts it: “Whatever your strength is, the first person you hire is your opposing strength.” If you’re brilliant at product development but struggle with sales, hire a salesperson. If you’re a natural salesperson but weak on operations, that’s where your first hire should focus.

Common first hires and their impact:

Virtual Assistant:

• Handles admin, scheduling, basic customer service
• Frees up 10-15 hours per week for business development
• Typical ROI: 300-500%

Marketing Specialist:

• Brings expertise in digital marketing, content creation
• Can significantly increase lead generation
• Typical ROI: 200-400% within 12 months

Salesperson:

• Focuses purely on revenue generation
• Should pay for themselves within 3-6 months
• Typical ROI: 400-800%

The key is hiring for roles where you can clearly measure the return on investment. If you can’t articulate how a hire will either save you money or help you make more money, you’re not ready for that particular role yet.

Before You Hire: The Foundation You Need

Here’s where many entrepreneurs trip up when deciding when to hire first employee. They hire someone and then wonder why things go wrong. The truth is, you can’t just throw someone into your business and expect them to replicate what you do (especially if what you do only exists in your head).

Before making any hire, you need:

1. Clear job description with specific outcomes
   • What exactly will success look like?
   • How will you measure their performance?
   • What are the key responsibilities?
2. Documented processes
   • Step-by-step guides for recurring tasks
   • Templates and checklists
   • Clear quality standards
3. Proper onboarding plan
   • First week, month, and quarter objectives
   • Training schedule and resources
   • Regular check-in points

Without these foundations, you’ll end up micromanaging, getting frustrated, and potentially losing a good employee. Remember, they’re not mind readers (they need clear direction to succeed).

The Hiring Timeline: Start Smart, Scale Sensibly

When you’re ready to hire, start with the role that provides the biggest immediate impact on your bottom line. For most businesses, this follows a predictable pattern, but remember the key principle: hire your opposing strength first.

Many successful entrepreneurs recommend prioritising sales if it’s not your strength, simply because without revenue, nothing else matters. However, the “opposing strength” rule means:

• If you’re strong in sales but weak in operations (hire operations support)
• If you’re great at product development but struggle with customer interaction (hire sales/marketing)
• If you’re naturally good with people but terrible with numbers (hire finance/admin support)

Typical hiring sequence: First hire: Your biggest weakness that’s actively limiting growth Second hire: Sales or marketing (if not covered in first hire) Third hire: Operations or customer service Fourth hire: Specialist roles based on business needs

Don’t try to hire a full team at once. Each new employee changes your business dynamics, and you need time to adjust your management style and processes.

Alternative Options Before Full-Time Staff

Remember, your first “hire” doesn’t have to be a full-time employee. Consider these options:

• Freelancers: Perfect for project-based work or testing out roles
• Part-time employees: Ideal for growing businesses with predictable but limited work
• Virtual assistants: Cost-effective for admin and basic support tasks
• Contractors: Great for specialist skills you need occasionally

These options let you test the waters without the full financial commitment of a permanent employee.

Making the Decision: When to Hire First Employee

If you’ve ticked all three boxes (you’re drowning in low value work, you have consistent revenue with a financial buffer, and you’ve identified a specific skills gap) then it’s probably time to start the hiring process.

Take a sheet of paper and write down: What is my strength? What are the opposing strengths that I need? That’s your answer for who to hire first.

The biggest mistake entrepreneurs make is either waiting for the “perfect” time to hire, or hiring people who are just like themselves. Knowing when to hire first employee requires honest self assessment. As Patrick Bet-David notes: “It’s cool to be around people that are just like yourself… but not when you’re running a business.”

Remember, hiring your first employee isn’t just about getting help (it’s about building the foundation for a scalable business). Done right, it’s the first step towards the freedom and growth you started your business to achieve.

The question isn’t whether you can afford to hire someone. It’s whether you can afford not to.

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Ex Nihilo magazine is for entrepreneurs and startups, connecting them with investors and fueling the global entrepreneur movement.