In The Netherlands we have a saying among entrepreneurs: "I wish you a lot of employees" or something like that, which means something like: the more employees the lower the profit and the higher the risk of getting out of business.
It's not all bad of course, but having, say, 2 employees who do your work, has serious consequences: you have to manage them, hire someone who does the office overhead and make sure you make enough money to pay them every month, also when they're not that productive or when profits are low. To keep them working, you have to hire a sales guy/gal as well, which together with the office person makes 4 employees for 2 effective workers. The bigger you get the more workers per office/sales you get of course, but when you're small it's skewed.
That's why we always work with contractors. We define a fixed project, hire a contractor to do it and that's it. You might pay a little more to the contractor, but in the end, it's not that high compared to the overhead you need to keep employees happy and busy and payed.
Another issue is the way you work, which is already discussed earlier in this thread. I work with a semi-agile method nowadays (not completely agile, but somewhere in between), with a document which contains design decisions and aspects to work out in the current phase. That way I can move forward very fast. The advantage is that I don't have to wait for another person to complete a given element I have to work with nor does another person have to wait for me to complete a given aspect. It's therefore key to have projects which are separated from eachother so one doesn't affect the other. You can achieve this in a number of ways, for example by interface stubbing (the way Open source projects do this: they define a lot of interfaces and then hand them to developers to implement them. This has disadvantages beyond belief but it can work pretty well). So it's not always a 'gain' to have a second pair of hands on deck: the work has to be scheduled efficiently so both people can work at full speed ahead.