When should an agency hire its first employee?
As soon as things are calm, not when you become even busier. The moment you think, "I need to find someone now," is the sign that you're three months too late. Hiring takes time: searching, interviewing and training. Anyone who waits until the pressure is high hires under pressure, and hiring under pressure almost always leads to the wrong people.
How do you know whether you're hiring the right person?
Use the hell-yes test: is it a clear yes after the interview, or is it "pretty much okay"? Pretty much okay is a no. An employee you still have to convince yourself about will cost you more energy than they bring. Ask questions during the interview that show how someone deals with setbacks and effort, because that's what you'll need later when things get busy.
What does it cost you not to hire your first employee?
Calculate the employee's full cost and determine how much revenue and margin you need to carry that commitment in a healthy way. Comparing gross salary with a single client invoice gives you the wrong picture.
Hiring is one side of building a team. Firing an employee when it no longer works is the other.