The easiest way that will really hit you is, are you turning away business because you can't handle the load?
If that is a yes, then you have to say, how much am I willing to pay a person to do the extra work?
Lastly, the business you are turning away, is it enough for you to pay a person, and still make money or at least break even.
The last one is the one that should really be the decider. If you can pay the person the salary you set in the second question, and still make money after expenses, then yes, you should hire someone. The trickier part is if you only break even.
The reason it is trickier is, maybe based on your current numbers of turned away business you break even, but wit that new employee, you could see an increase in business due to word of mouth and that sort of thing.
The only time you say no to hiring is when it would not make you money, or break even after you hire.
I'll echo some of what Christopher said, and agree that it's really more a matter of hiring someone when you can no longer afford not to hire them.
Do keep in mind that depending on the kind of work you are doing - you may be able to contract or part time hire some help, from an individual or a firm.
The determination of can I afford should always follow the question of "do I really need", and "for what."
All too often I see people hire before they have strongly determined the need for that person, and exactly how they will leverage them.
Think about all the things you are doing on a daily basis - and then think about which of those tasks you could give up, and which you are uniquely suited to handle. Is there enough work in the "things I can give up bucket" to keep someone busy? What would the impact to your day be in letting some of those things go? Would it allow for more sales? More development?
Another thing that is often overlooked is the short term impact on your time to onboard and train this person. The transition from a company of one, to a company of two is one of the most challenging - because the entire burden of helping them to help you, is on you.
I've been through this many times, and the approach and timing vary greatly depending on the type of business - but the base diligence of figuring out how much you need this person, and what transformation that will bring about in the business is always the starting point, and never a waste of time.
I hope the above helps!
I think the question you should be asking is how will hiring an employee or employees change the way I run the business?
Too often entrepreneurs who started a business find themselves being run by their business rather than running the business because they have lost the passion of why they got into the business in the first place.