Today, small business owners usually employ contractors to help their businesses run. Through contractors, employers can hire a marketing specialist, payroll specialist, office manager and more, without paying full-time salaries to any of them.

It’s a solution that works well for both parties until it doesn’t.

For some lucky small business owners, they have reached a point in their business growth where it’s time to hire their first employee.

But how do you know for sure?


You’re Turning Down New Business

One of the best indicators it’s time to hire an employee is that there’s too much work to go around. If you’re turning down work because you don’t have the time, you need to start thinking about finding a way to make the time.

For small business owners, the answer may be hiring an employee who can do the job.


You’re Paying a Contractor More Than You Would an Employee

Another sign that it might be time to hire is that you’re paying a contractor more than you would an employee. Contractors often work on an hourly basis, but those hours add up quickly.

At some point in time, you may find that the contractor’s hourly work costs you more than it would to hire a full-time employee, even with the addition of health benefits and vacation time.

Remember, contractors often receive more hourly than an employee because they don’t receive the same benefits that an employee does.


You Have Too Many Contractors

At some point in time, you may find yourself with too many contractors. It seems crazy to think about, but it happens.

Communicating with contractors takes time. Processing payroll for contractors also takes time. Plus, there’s keeping track of what you pay each contractor, what their skill sets are, and more.

Sometimes, you can fulfill the jobs of multiple contractors with a single full-time employee. The nice thing about working with contractors is you may find your first employee in that pool of contractors.

Turning a contractor into a full-time employee allows you to add a person to your team that you are familiar with. You know their work. You know their personality.

You already know this person will help your business succeed.


The Product is Slipping

The most important thing to come out of your business is the end product that you provide the customer. If you start missing deadlines, submitting subpar work to customers, or failing to respond to a client question promptly, it may mean you don’t have enough staff to do the job.

If the product you supply to your customers isn’t up to your usual standards, you need to investigate immediately.

It’s possible, you need to hire an employee to bring your customer service back to an appropriate level.


You Need Someone with a Specific Skill Set

I took this one from marketer Neil Patel.

Patel points out that, “As an entrepreneur, you’re probably somewhat of a jack-of-all-trades. But there’s nothing wrong with bringing someone onto your team who specializes in specific skills. For example, let’s say you’re great at marketing, but you don’t know how to use SEO. Hire an SEO expert.”

When hiring an employee, you don’t want another you. You want someone who can fill in for your shortcomings and make your business better.


You Don’t Get a Break

Almost every successful CEO will point out that if your physical or mental health suffers, so does your business. Businesses require work, but a 24/7/365 pace is not sustainable.

If you’re working long hours without a break, it may be time to find yourself some relief.

While hiring an employee may hurt your bottom line in the short run, it will help the overall health of your business in the long run.



When looking at the possibility of hiring a full-time employee, make sure you have enough work commensurate to their skill set. The last thing you want to do is pay an employee expert wages and then fill their time with busy work.

Make sure the pay matches the work.

If it doesn’t, then you may not be ready for a full-time employee just yet.

For some tips on how to Interview the Right Clients, check out this previous post


Written by Erika Towne