When Should You Hire Another Employee? The Numbers Contractors Need to Know

When Should You Hire Another Employee? The Numbers Contractors Need to Know When should you hire another employee in your contracting business? Being booked out isn’t enough. Having cash in the bank isn’t enough. And being completely overwhelmed definitely isn’t enough. Before adding another employee, contractors need to understand whether the business can actually support the additional payroll. In this episode of Profit Isn’t an Accident, Shannon Howard breaks down the numbers contractors should know before hiring another employee. You'll learn: • How to calculate the true cost of a new employee • Why an employee costs much more than their hourly wage • How gross margin affects your hiring decisions • How much additional revenue a new employee needs to help generate • How to determine whether you actually have a capacity problem • Why your pipeline matters before adding payroll • How to stress test a new hire against a 20% revenue drop • Why waiting too long to hire can also hurt profitability Before you add another technician, project manager, office employee, or crew member, make sure you're solving the right problem. Your homework: Write down the true monthly cost of the employee, your gross margin, the revenue needed to support the hire, the predictable work in your pipeline, and what happens to your cash if revenue drops 20%. Then ask yourself: Does this hire create capacity and profit, or am I hoping another person fixes a problem I haven't identified yet? If you can't confidently answer that question, message Shannon HIRE. Subscribe for practical conversations about contractor profitability, cash flow, hiring, financial strategy, and building a business that doesn't depend on you every minute of the day. Own your business. Live your life.