When to hire your first employee?

You start your business alone, and after a few months of hard work getting your name and brand out there, clients and work are picking up. You consider hiring.
Let's assume you did not start your business backed by a generous sponsor, so money is still tight.
Hiring an employee is a big commitment. Do not forget that in Western Europe, for instance, the gap between gross and net salary for an employee can mount up to three. That means that an employee that takes home 20'000€ net, will cost the employer three times more; 60'000€ per year! Yes, two-thirds go to taxes in some of those countries.
Whatever the case, an employee is a risk. Do not take risks without getting rewarded financially. That implies that every employee should make you money. No exceptions! Even in the case of the Western European, high-taxed country.
Let' s do the math. The 60'000€ employee will work around 1750 hours per year. That brings his hourly cost to 34€. If you cannot sell these services for at least 40€ per hour, forget about it.
Let's assume you can. When is the safe time to hire?
If you are not afraid of hard work, here is one risk-averse way to go.
Let's assume a 40-hour workweek. As mentioned, you started alone, and you attract more work and clients. You work 40 hours, 50 hours, 60 hours... In theory, when you consistently work 80 hours per week, you have work for two (80=40+40). You are now in a position to hire your first employee with the least amount of risk because you have the revenue to cover that salary.
However, 80-hour workweeks are no joke. In theory, you could optimize this a little bit and still be safe. For example, if you take a 20% profit margin on working hours, you could recruit at 40/1,2=33 hours. In other words, when you are consistently working 73 hours per week, you could hire your first employee. Again, this is all very conservative and very much on the safe side. It depends entirely on how you, as a new business owner, relate to risk-taking.

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Top 10 about the author; Erik Victor
1. is a serial entrepreneur and started his career in Engineering
2. currently a majority shareholder in corporations in the fields of Industrial Real Estate, Wealth Management & Investment funds, and International Tax Planning
3. has a passion for the dynamics of young businesses and actively endorses several start-ups
4. is an engaged member of several think-tanks and an international conference speaker
5. has a business footprint in six countries
6. speaks five languages
7. personal life - resides in Europe
8. Erik (48) is known as a discrete and private person, a family man
9. loves to spend his limited holidays in the mountains or at sea on his yacht
10. Erik has no social media accounts