How to Know If Your Business Is Ready for an In-House Hire

Every business owner hits a point where they think, I just need someone dedicated to me. Someone who gets it. Someone who’s all in on this business. And the natural next thought? It’s time to hire someone in-house.

The logic makes sense. When you’re deep in the weeds, wearing every hat, having someone fully focused on your business feels like the golden ticket to relief. But most founders don’t pause to ask: Can your business actually afford it?

Hiring in-house is a major milestone — and a serious financial and operational commitment. The truth is, a lot of founders make the leap too early, driven by emotion and overwhelm, without looking at the numbers.

As someone who has hired hundreds of team members and has consulted for nearly 500 small business owners, I believe you should start with the numbers when making the decision about how to get support.

Related: 4 Things Every Entrepreneur Must Consider Before Hiring Their First, or Next, Employee.

In-house hiring: Understanding the appeal and the risks

It’s easy to romanticize the idea of an in-house team member. They’re “yours,” right? Ideally, they are fully dedicated to you, and they’re immersed in your brand, in your mission, in your daily operations. If this is how you feel, you are certainly not alone.

There are real upsides to hiring in-house. In-house hires offer more control, greater consistency and deeper investment in your company’s long-term vision. At the same time, hiring in-house is taking on a huge responsibility. You’re now responsible not just for their pay, but for training, managing, integrating and retaining them.

You also take on the heavy burden of finding the right talent, performance management and potentially having to let people go.

Ultimately, the decision of how much support to handle is a quantitative one.

The CEO’s key KPI: Revenue per FTE

One of the clearest indicators that you’re ready to hire is your revenue per full-time equivalent (FTE). This metric measures how much revenue your business generates per full-time team member. Experts recommend that businesses aim for at least $500,000 of revenue per year before hiring a full-time employee.

Let’s break down the math: If you’re making $500,000 annually, at a minimum of 25% margin, that leaves you with $125,000 to pay your employee, which is plenty in most markets.

If you are bringing in less than this, strongly consider not bringing anyone in-house.

Let’s review the options you have before bringing someone in-house.

Related: Starting or Growing a Business? Here’s How to Know When You Should Hire Your First Employee.

Your options before hiring full-time

Before you look at adding team members, take a hard look at how your time is being spent. First, look at either deleting or automating tasks that are time-consuming or repetitive, but can be systemized. Instead of solving inefficiency with headcount, refine your processes before handing them off.

If you aren’t sure where to start with that, bring in a specialist who can help create and optimize your systems. A generalist hire is generally not equipped with the right skills to do optimization work, so investing in a consultant first is a great way to set up your future in-house hire for success, while avoiding committing to a salary.

Once you’re optimized, look at options for part-time support. This support can be either in-house part-time support or outsourced support. For example, this support could look like a freelancer, a project-based consultant or a part-time assistant.

This gives you flexibility and expertise without the long-term financial commitment of a full-time salary. It also lets you test out what kind of support you really need before you build an in-house role around it. Finally, it allows you the ability to flexibly increase or decrease your support without going through the more intensive performance management process with an employee.

When hiring fractional, aim for someone with at least five years of experience in the specific function you’re hiring for. As an early-stage founder, you don’t have the capacity to train someone junior from scratch and don’t have the margin for having someone who isn’t at the top of their game.

Lastly, research shows that looking for attitude and work ethic is more important than experience when it comes to predicting job fit. Look for someone who shares your company values, has a proven work ethic and brings a positive attitude, even if they are just a temporary fractional consultant.

Related: Hiring vs. Outsourcing: How to Recognize the Right Moment to Add Talent to Your Team

Look at hiring in-house once you’re making profit

Remember, this isn’t a firm line. But once you’ve optimized and have gotten your profit flowing, it may be time to look for an in-house hire.

There’s a lot of ego tied up in hiring. We want someone who’s “ours” and who cares as much as we do. But ultimately, the most important question isn’t whether someone’s full-time. It’s whether your business has the structure, profit and direction to support them.

If you’re not there yet, don’t panic. Keep building, simplify and practice outsourcing in small ways. And when the time comes to build your team in-house, you’ll be doing it from a place of strength. That will set up both you and your new hire for success.