How to determine when to add employees

Determine if existing employees can take up the slack.
You may be able to reassign tasks to people you already have. Project management software, such as Microsoft Project and MindManager, or online tools, such as Microsoft's Appointment Manager, can help you see where everyone is spending their time.

Financial programs such as QuickBooks also have built-in time management tools for your employees. Look for efficiencies this way.

Technology can help keep staff size down.
Technology can help lighten your current employees' load. CRM software, for example, can reduce the need for extra customer service representatives. Contact management software can let your salespeople close more sales and save you the cost of hiring extra manpower. Secure smart phones and laptops enable your employees to work remotely and to have less downtime while traveling.

Project your cash flow.
It pays to take a hard look at the industry you're in. Is it growing as a whole? What are your sales forecasts? Use online cash flow tools, such as this one from Entrepreneur.com, or the reports built into your business accounting software to make sure you'll be in a position to hire someone new.

You should also determine what the revenue effect will be of the new hire. Can he or she bring in revenue directly? Or would the additional help free others from administrative tasks and let them bring in more money?

If you're a contractor with a showroom, for example, would adding a receptionist to watch the phone mean that you can go out on more job estimates while leaving your storefront open? Or would you be better off with a more expensive salesperson, one capable of selling your products and services to new customers who walk in the door while you're gone?

Test the waters.
Consider hiring a temp before going for a permanent employee so that you can try someone out, with an eye toward hiring him or her permanently, and test out the position itself to see if it helps your business. You can also contract out work to a freelancer if you know you have a big project coming up. There are business support services you can use for packing and shipping, answering the phone, and more.

Look up appropriate wages and benefits for a similar position.
Once you've laid out the parameters for a new position, figure out what skills someone would need to do the job. Use online job search resources at Entrepreneur.com and Monster.com to get a basic idea of salary and experience requirements for similar positions. Projecting the total cost of hiring a new employee beforehand, including benefits, can help you make crucial hiring decisions.

Train your employees online.
Think about ways you can sign up employees for online classes. Resources such as the Small Business Training Network and the Online University Directory can help you set up training for your current employees. This is good on two fronts: First, you'll quickly get new hires up to speed, and second, you'll be able to retain employees and help them grow their careers while they help you grow your business.