How much work do I need before hiring?

Enough that the new person is busy after the cushion runs out, not just during it. If you cannot name the specific work, you are hiring on optimism.

Should I use a subcontractor instead?

Often, early on. It converts a fixed cost into a variable one, which is exactly what you want while you are still finding out whether the work is steady.

What if I lose work because I am short-handed?

That is a real cost and worth weighing. But turning down two jobs is survivable. Carrying a wage you cannot fund is how businesses fail while looking busy.

← Answers

Can I afford to hire someone?

The money in your account is a one-time number and a wage is a recurring cost. Cushion covers a salary for a few months; after that only work coming in covers it. So the real question is not whether you can afford the first three months — it is what is expected to hold the cost after that.

Cushion and income are different things

Forty thousand in the bank can pay a wage for five months. It cannot pay one indefinitely. Before the hire, ask what work is expected to carry it once the cushion is gone — booked jobs, a contract renewing, a season you can count on. If the answer is "more work will come", that is a hope, not a plan.

Some of that balance is not yours

A bank balance holds the sales tax you collected and the deductions you withheld from payroll. Neither is spendable. An owner who thinks he has forty thousand and actually has twenty-two does not need advice, he needs the subtraction he forgot.

What the hire is for changes the answer

Hiring to take work you are turning down is a different decision from hiring to get yourself off the tools, which is different again from covering someone you think is about to leave. Same cost, three different risks. Be specific about which one you are actually solving.

The cost is bigger than the wage

Payroll taxes, insurance, tools, a vehicle, and the weeks before they are productive. And your time — a new person costs you hours before they save you any. Budget the real number, not the hourly rate.

Also asked

How much work do I need before hiring?: Enough that the new person is busy after the cushion runs out, not just during it. If you cannot name the specific work, you are hiring on optimism.
Should I use a subcontractor instead?: Often, early on. It converts a fixed cost into a variable one, which is exactly what you want while you are still finding out whether the work is steady.
What if I lose work because I am short-handed?: That is a real cost and worth weighing. But turning down two jobs is survivable. Carrying a wage you cannot fund is how businesses fail while looking busy.

Written for your trade

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