The right time to hire is when three things are true at once: there is consistent, repeatable work that somebody else could do, the business can carry the full cost with margin to spare, and you understand the role well enough to recruit for it properly. If one of those is missing, wait. Affording the salary is the wrong test, because in the illustration below the salary is about two-thirds of the first-year cost.
Do not hire because you are overloaded and hoping a new person will fix it. Overload is often a structural problem, such as pricing, process, scope or work that should never have been taken on, and adding headcount gives you the same problem with a higher cost base.
What does a first hire cost?
Start with the arithmetic.
An illustration, not a quotation — use your own figures, and get the exact employer National Insurance and pension amounts for your payroll from your accountant. Salary £28,000. Add employer National Insurance, pension and the cost of a desk, laptop, phone and software licences: on typical figures that is 20 to 25 per cent on top, so call it £34,500 fully loaded, or £2,875 a month. Recruitment: an agency fee at 15 per cent of salary is £4,200, or several days of your own time if you do it yourself. Then the ramp-up — nobody is fully productive on day one, so assume three months at partial output, which is roughly £5,000 of cost against reduced return. First-year cost is therefore closer to £43,000 than £28,000.
The free True Cost of a Hire calculator runs the same sum with your figures.
How much revenue does the hire need to cover?
At a 45 per cent gross margin, £34,500 of annual cost needs roughly £77,000 of additional revenue to cover it. Work that out with your own margin before you advertise, and write the number down — it is the number the hire has to earn.
If the role does not generate revenue directly — an administrator, a coordinator, an operations person — then it has to release owner time that does. Be specific about that: if the role frees twelve hours a week and you put four of those into selling, four into pricing work properly and four into managing, that is the return you are underwriting. Write down which of the two it is before you write the advert. If you cannot see the margin yet, understanding your numbers comes first.
Who should you hire first?
The first hire often works best when it frees the owner’s time for work only the owner can do: administration, scheduling, processing, coordination, and delivery work that does not need your judgement.
Another fee earner is sometimes the right hire. But if you are still doing eight hours a week of invoicing and diary management, a second fee earner adds work to the bottleneck rather than removing it — more delivery arriving at the same single point of approval. Work out where the queue forms before you decide what to buy; stop being the bottleneck is the diagnostic for that.
Why write the job description first?
Writing the role down shows whether you know what you are buying. Write it around outcomes rather than attributes. What does success look like at 90 days, and at six months? What will this person own that nobody currently owns?
If you cannot answer those questions, you are not ready to recruit, and you risk appointing whoever interviews best.
How do you run an interview that predicts the job?
Use structured interviews: the same questions, in the same order, for every candidate, aimed at the competencies the role needs. Unstructured interviews favour people who interview well and people who remind you of yourself.
Ask about specifics, such as “Tell me about the last time a client was angry with you. What did you do?” Where you can, set a short, paid, realistic task: half a day of someone doing something close to the work.
How do you check references properly?
Ask referees about performance in situations similar to the ones the person will face with you: what they owned, how they handled pressure, what they were like to manage.
Ask: “If you could have them back tomorrow, would you?” Take two references, speak to people rather than exchanging emails where you can, and note any reluctance to talk.
Why does onboarding matter?
A poor first month can weaken a strong appointment, because the first 90 days set the expectations, relationships and habits that persist.
Write the plan before they accept: who they meet in week one, what they own by when, and a weekly half-hour with you for the first six weeks. Book the 30, 60 and 90-day reviews in the diary on day one.
What are the cheaper alternatives to hiring?
Work through these four first, because a hire is expensive and hard to reverse.
- Put prices up. If you are at capacity and turning work away, higher prices reduce demand and raise margin at the same time.
- Stop doing the unprofitable work. Rank clients by gross profit and there is often a bottom slice consuming disproportionate capacity. Releasing it can free more time than a new person would.
- Fix the process before adding people to it. Hiring into a broken process doubles the cost of the broken process.
- Outsource a defined function. Bookkeeping, payroll, first-line support. It scales down as easily as up.
If you have worked through all four and the work is still there, you have a sound basis for hiring.
What to do this week
- Prove the work is consistent: three months of evidence, not one busy fortnight.
- Cost the role fully — salary plus 20 to 25 per cent, plus recruitment, plus ramp-up.
- Work out the coverage: how much revenue at your gross margin, or how many owner hours released and what they will be used for.
- Write the 90-day and six-month outcomes before you write the advert.
- Fix the interview questions in advance and use the same ones for everyone.
- Design a practical task that resembles the real work, and pay for it.
- Take two references and ask the returning-employee question.
- Write the first-30-days plan before they accept.
- Book the 30, 60 and 90-day reviews in the diary on day one.
Four questions to answer
- Is this a headcount problem or a structure problem?
- Out of ten, how clearly could you describe what this person will own?
- What will you stop doing once they start, specifically and by name?
- If the hire does not work out, at what point will you accept that, and what will you do?
Hiring makes an owner a manager, which needs a different skill set: briefing, standards, follow-up and difficult conversations. That transition is the core of Leadership Coaching, and building a team around your strengths is a good companion read before you write the advert.
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Common questions
Should I hire part-time first?
Often, yes. Two or three days a week for an operational role reduces the risk, tests your own ability to delegate and can be scaled up as the work proves itself. It also suits a wider pool of good candidates than a full-time role does, particularly for experienced people who want fewer hours. Do not expect five days of output from three days of hours. Define the outcomes for the days you are buying, and increase the hours when the work outgrows them.
Should the first hire be a contractor or an employee?
It depends on the work, the control you need and the employment status rules, which are a matter for your accountant rather than a coaching guide — get that checked before you agree anything, because getting it wrong is expensive. Commercially, the distinction is simpler. Contractors suit defined projects, specialist skills and work with a clear end point, and they cost more per hour for a reason. Employees suit ongoing accountability, client relationships and anything where you need somebody to own an outcome over time rather than deliver a task. If you want the role to grow into something, that points to employment.
How long before I know whether it is working?
You will have a strong signal by 90 days if you set clear outcomes on day one and reviewed them at 30 and 60. Without those outcomes you will still be unsure at nine months. Judge against what you wrote down, not against how you feel about the person. And separate the two questions that get tangled here: is the person capable, and did you define the role well enough for anyone to succeed in it? Write the answers down at each review.
What if I get it wrong?
Act early. Much of the cost of a poor hire is in the months spent hoping it improves, and every one of those months makes the conversation harder and the damage to the rest of the team greater. Handle it properly — there is a right process for managing performance and for ending employment, and taking advice on it is cheaper than getting it wrong. Then review whether the role was well defined, because that part is yours to fix.
Do I hire ahead of the work, or wait until it is there?
Wait, and shorten the wait deliberately instead. Hiring ahead of the work means funding the full monthly cost — £2,875 in the illustration above — on the strength of a hope. The exception is an evidenced pipeline: signed contracts, or a client who has confirmed in writing that volume rises on a date. A busy quarter is not that. If the fear is that waiting means turning work away, treat that as the problem to solve rather than the reason to hire — subcontract the overflow, raise prices on new enquiries, or accept the work on a longer lead time and be straight with the client. All three are reversible, unlike a salary.