Most small business owners ask this question at roughly the same point in their journey. Things are getting busy. You’re turning down work, or the work is eating your evenings, or you’re just tired. And the obvious answer seems to be: get some help.
But “should I hire staff” is rarely a simple yes or no.
There’s an important question to ask first. Are your systems and gross profit margins ready to scale up with staff?
Sometimes the answer is no – you need to spend a little bit more time refining your model first. Because once you hire, you’re stuck with what you’ve got – employment contracts can’t be varied easily, and that can remove a lot of early-stage flexibility from a business.
There are two paths worth considering here. One is about optimising first, then hiring into something that actually works. The other is about staying lean and using contractors to keep your options open while you figure things out. Neither is wrong. They suit different businesses, different owners, and different stages.
Before You Decide Whether to Hire Staff, Look at Your Gross Profit Margin
Here’s the thing most business owners skip: they think about the cost of hiring, but not whether the business is actually ready for it.
If your gross profit margins are thin, hiring staff doesn’t fix that – it magnifies it. Because when you personally deliver a service, it’s efficient, lean, and perfect. When staff do it, it’s just never going to be as good.
You end up with a bigger operation running at the same or worse margin, which means you need even more revenue just to stay afloat. The pressure goes up, not down. You’ll also need to maximize client intake to cope with permanent staff salaries.
The real question isn’t “can I afford to hire someone?” It’s “have I built something worth scaling?”
According to business.gov.au, the true cost of an employee in Australia typically runs 20 to 30 percent above their base salary once you factor in superannuation, leave entitlements, payroll tax (depending on your state and wages bill), workers’ compensation, and onboarding time. A $60,000 salary might realistically cost you $75,000 to $80,000 once everything is accounted for. That’s a fixed cost that shows up every month whether you’re busy or not.
That context matters when you’re thinking through which path suits your situation.
Path One: Optimise First, Then Hire Into a Profitable Model
This path asks you to slow down before you scale up.
The idea is straightforward. Before you hire staff, you tighten up everything that’s already in your business – your pricing, your service delivery, your margins, your systems. You build something that’s actually working well. Then, when you do bring someone on, they’re stepping into a machine that runs, rather than a pile of parts you haven’t had time to assemble.
In particular, you’ll need to generate client loads for not just yourself but someone else too, so make sure your marketing is ready for some serious energy injection.
Why Pausing before Hiring Staff Works
Most small business owners undercharge. Not by a little – often by a lot. They priced their services when they were newer, less experienced, or more desperate for clients, and they’ve never revisited it. If that sounds like you, getting your pricing right before you hire is one of the highest-leverage things you can do. A price increase across your client base might make hiring staff viable without adding a single new client.
Beyond pricing, this path is about figuring out which parts of your service deliver the most value per hour of your time, and doubling down on those. That might mean cutting a service line that’s low margin and high effort. It might mean shifting to a retainer or subscription model instead of hourly work. It might mean raising your minimums and accepting fewer, better clients.
The goal is to build a business where, when you do hire staff, they’re contributing to real profit rather than just helping you tread water.
Remember: if a staff’s Gross Margin is worse than yours, they may contribute very little to the bottom line, while cost substantial administrative and space overheads.
What This Requires
Patience, mostly. And a willingness to look at your numbers without flinching.
You need to know your gross profit per service, per client type, per day of the week. You need to understand where your time is going, and whether the revenue generated by that time actually justifies it. A lot of business owners find, once they do this properly, that they’re far more profitable on certain days or with certain clients – and that restructuring around those insights is more valuable than any hire they could make.
This path also requires getting your systems in place before you hand work to someone else. If your processes only exist in your head, training a new employee will cost you months of productivity. Systems first, staff second.
I recommend that you have a full video staff onboarding system BEFORE your first ever staff member. That way you can use them as a guinea pig to see if you can onboard all future staff with minimal energy.
The Payoff
When you do hire from this position, the business can absorb it and ramp straight into scaling mode. You’re not gambling on growth to justify the cost – the margin is already there. You can train someone properly. You can give them meaningful work. And because you’ve tidied up the model, the things you hand off are cleaner, better defined, and easier to manage.
This is the path that tends to produce genuinely scalable businesses, rather than busy ones.
Path Two: Use Contractors and Consultants to Stay Lean
The second path suits a different kind of owner – one who’s still experimenting, or who values flexibility over scale, or who simply doesn’t want the responsibility of managing permanent staff right now.
Instead of hiring employees, you bring in contractors or consultants on a project or revenue-sharing basis. They do specific work. You pay them for it. When the work dries up or changes direction, the arrangement ends without redundancy paperwork or difficult conversations.
You can really stay lean by ‘leaning’ on contractors, in an ethical manner.
Why This Works
The main advantage is flexibility. You can try things without committing to them.
Thinking about adding a new service? Bring in a contractor who already has the skills. If the market responds, you can scale it. If it doesn’t, you haven’t hired a full-time employee into a role that no longer makes sense. You’ve spent money on a project, learned something, and kept your fixed costs manageable. And the government won’t be coming after you for unfair dismissal in two months’ time.
This path also keeps your energy low in a particular way. Managing permanent staff takes a different kind of headspace than managing project-based relationships. You’re the leader. The boss. The one who always has to be smiling and performing.
If you’ve built a lifestyle-aligned business model – one that gives you time and flexibility as well as income – adding the people-management overhead of permanent staff can quietly erode what you built.
With contractors, the relationship is cleaner. They’re professionals. They show up, do the work, and move on. You don’t need to be particularly good at management to make it work. I personally prefer to work with contractors as we can set the boundaries up front during the contract signing, and then I never have to worry about it again – they either perform to the standards of the contract, or I find someone else.
What This Requires
A clear understanding of what you need and when you need it. Contractor relationships work well when the work is well-defined, and directly tied to the revenue generating items. They work poorly when you need someone to “just figure it out” the way a long-term employee might.
You also need to be across your obligations under Australian law. The ATO has specific rules about contractor versus employee classification – misclassifying employees as contractors carries real risk, so it’s worth being across those rules before you start.
The short answer is: a real contractor makes their own rules, and sets their own hours – you can’t force them to to use your exact processes.
The other thing to watch is cost per hour. Contractors typically charge more per hour than employees earn, because they’re covering their own super, insurance, and downtime. That higher rate is often worth it for flexibility, but it’s not always cheaper in a direct comparison. Do the maths on your specific situation before assuming either path is more affordable. Tying contractor pay directly to your own products is a great way to reduce risk even further.
The Payoff
You keep your overheads variable. You can scale work up and down as the business shifts. You don’t have the full weight of employer obligations sitting on your shoulders every month.
And if you’re using this path intentionally – as a way to test and refine your model before committing to permanent headcount – it’s a smart way to grow without overextending.
Some businesses go really far with this model. I mean, we all know about Uber.
Should I Hire Staff? Let’s Decide.
The real answer is: it depends on which problem you’re actually trying to solve.
If you’re busy but unprofitable, hiring staff won’t fix that – don’t hire yet. You need to work on your margins first. Take the time to get your pricing right, streamline your services, and understand your numbers properly. Stay solo until your underlying model is fixed.
If you’re profitable but want to test new directions, contractors are great. If you want to keep your lifestyle and your freedom intact while still getting work done, contractors are often the better call. They give you the capacity without the commitment.
And if you’re genuinely profitable, genuinely scalable, and genuinely ready to manage people – then yes, hiring staff can be a real growth lever. This is the final goal for any scale-up. But that’s a narrower category than most business owners assume they’re in when they first start asking the question.
A useful exercise: before you place an ad, write down what a new hire would cost you in full (not just their salary), what revenue they would need to generate or free up to justify that cost, and whether your current model actually produces that margin. If the maths work, and your systems are fully built and ready, move forward. If they don’t, you have a clearer picture of what to fix first.
Have questions about pricing your services or building a model that actually supports growth? Start with your gross profit before you think about headcount.