Are You Ready to Grow? 3 Financial Signs It's Time to Hire Your First Employee

As a Kansas-based entrepreneur, you wear all the hats: CEO, salesperson, marketer, and—of course—chief operator. You’re handling everything yourself, and it’s working. Your business is growing, and you’re starting to wonder if it’s time to bring in help.

Hiring your first employee is one of the biggest and most exciting steps you can take. But it also comes with significant financial responsibility. Making this decision at the right time is crucial. You want to bring someone on when the business can not only afford the salary but also the hidden costs of payroll taxes, workers' compensation, and potential benefits.

So, how do you know you're truly ready? The answer is in the numbers. Here are three key financial signs that your Kansas business is ready to hire its first employee.

1. You Have Consistent, Predictable Revenue

The most important sign is a stable income. It’s easy to feel confident after a few big sales, but is your revenue consistent month over month, even in slower seasons?

Before you hire, create a realistic 12-month financial forecast. Look for patterns and identify your busiest and slowest periods. Can your business comfortably cover a full-time salary and all associated costs during your slowest month? A strong, predictable cash flow is the solid foundation you need to handle the ongoing financial commitment of an employee. If your revenue is still volatile, consider hiring a contractor (1099) for project-based work first to test the waters without the full burden of payroll.

2. The Return on Investment (ROI) is Clear

Every dollar you spend on a new employee should come back to your business, and then some. This means the person you hire needs to directly contribute to your bottom line.

Ask yourself: Will this new employee’s work free up my time to focus on high-value tasks, like sales or strategic planning? Will they directly generate new revenue? For example, if you spend 10 hours a week on administrative tasks that could be outsourced, a new employee could free up that time for you to close more deals. The money you invest in their salary should be less than the new revenue or efficiency their work creates. If you can’t make a clear financial case for the hire, it might be too soon.

3. You Have a Healthy Operating Cash Balance

Beyond your regular income, do you have enough cash on hand to cover a few months of payroll and operating expenses? This is your safety net.

A healthy cash balance protects you from unexpected dips in revenue. Think of it as a cash buffer that allows you to confidently make payroll even if a big invoice is paid late or a key project is delayed. For many small business owners, this safety net provides the peace of mind needed to take the leap into being an employer.

Taking the Next Step

Deciding to hire is a milestone, and getting the financial side right is crucial. Once the numbers tell you it’s time, the next step is setting up your payroll correctly. This involves getting a Federal Employer Identification Number (FEIN), setting up tax withholding, and ensuring compliance with all state and federal regulations.

That’s where a good accounting partner comes in. We can help you navigate the complexities of payroll, from setting up systems to ensuring you're paying the right taxes on time. This allows you to focus on what you do best: growing your business.

Ready to see if your business is financially prepared to grow? Let's talk about your numbers and build a plan for your first hire.