Should I Hire My First Employee?
Answer the financial question: does the value of time freed exceed the fully-loaded cost of the hire? Get a clear yes, wait, or no with reasoning.
1.25-1.40 typical (benefits, payroll tax, equipment)
How the Comparison Works
Most founders hire too late (burnout) or too early (runway crunch). This tool balances the math against your specific revenue, growth rate, and opportunity cost of your own time.
1. Fully-loaded cost
Base salary × 1.25-1.40 multiplier for benefits, payroll tax, equipment, software seats. Compare to your revenue.
2. Value of freed time
Hours freed × your effective hourly rate. If you could bill $150/hour, each hour freed is worth $150.
3. Recommendation
Yes if value > 1.5× cost; wait if value barely exceeds cost; no if cost exceeds value at current revenue.
Frequently Asked Questions
What revenue do I need before making my first hire?
Conservative: fully-loaded first hire cost should be under 25% of monthly revenue. A $5,000/month fully-loaded hire needs $20,000+ monthly revenue. Aggressive: 30-40% if strong growth and hire accelerates revenue.
What is fully-loaded cost and why 1.3x multiplier?
Base salary × multiplier covering payroll taxes (7.65% FICA), benefits (10-15%), workers comp, unemployment, equipment, software. 1.25-1.40x typical; 1.5x+ for heavy benefits.
Should I hire an employee or use a contractor first?
Contractor first is usually smart for your first hire — lower fixed cost, no benefits overhead, flexibility. Beware misclassification risk: IRS has strict rules on contractor vs employee status.
How should I value my own time?
Use your own billing rate if you have one, or 2x the fully-loaded cost of a mid-level equivalent. Most founders under-value their time.
What tasks should the first hire take over?
Either lowest-leverage tasks that drain time (admin, basic support) or highest-leverage tasks you can't scale (sales, engineering). Avoid generalist middle-ground hires — they free least time per dollar spent.
My recommendation says 'wait' but I'm burning out. Now what?
The tool only evaluates financial impact; founder burnout has business-critical effects the math ignores. Options: part-time contractor, raise prices, cut product scope. Sometimes the right hire is financially irrational but operationally essential.
Track Hiring Capacity Over Time
See a rolling projection of when your revenue can sustain each planned hire — updated as your numbers change.