Can I afford to hire someone? A decision sequence, not a revenue guess

Start with the work that is not being completed, the owner time being displaced, or the sales and service capacity being constrained. Estimate the productive hours required and the time at which the workload becomes recurring. A permanent cost is a poor response to a temporary spike unless the downside is explicitly acceptable.

Compare the same hours and output across employee, contractor and overtime options. The comparison is economic, not legal: worker classification, awards, leave, superannuation, payroll tax and insurance depend on jurisdiction and circumstances and must be checked separately.

Use salary or wage, employer on-costs, equipment, software, recruitment, management time and other recurring costs that arise because the role exists. Keep one-off setup costs visible instead of hiding them inside a monthly average if they create an immediate cash draw.

Then convert the recurring cost into the additional contribution the business must produce. The required revenue depends on the contribution-margin rate, not the top-line sales figure alone. If contribution is zero or negative, there is no finite positive revenue level that covers an added fixed cost under that cost structure.

Model the new recurring outflow with current cash, observed monthly inflows and observed monthly outflows. Test a start-date delay, slower sales, a customer loss or a period before the employee is fully productive. These are owner-selected scenarios, not forecasts.

Set the decision boundary before looking at the answer: minimum cash reserve, minimum runway, earliest acceptable start date and the evidence that would justify proceeding. If the hire only works when every upside assumption succeeds, the business has learned that the decision is fragile.

A useful decision is not simply yes or no. It states the current headroom, the added monthly cost, the low-cash point, the contribution or sales threshold, and the assumption most likely to reverse the answer. It can then say “hire now”, “wait until the threshold is sustained”, or “use a smaller reversible option first”.