Also try and make sure that your inn is close to the area of conflict.

By that I mean to say that an inn waaaaay behind the front lines isn't going to produce the quality of units or number of units that an inn right on the frontier with an enemy empire will.

You might also want to be aware that while hiring mercs may be a relatively inexpensive way to get troops fast, you're paying double the support costs for them every year IIRC. So keep an eye on your finances.

What many of us do, I believe, is try to limit your merc activities to the very early game or to units that your empire would not otherwise have access to.

Hope this helps,

Micah