Once you can see that you're definitely going to need to go dedicated, I'd recommend making the switch in a timely manner (even if you could possibly make it work for a little while longer). I've never needed anything more than a VPS myself, but I've been a user of more than one website whose owners essentially refused to acknowledge that they needed more resources and ended up with extended downtime. When they finally made arrangements to upgrade, they'd lost a considerable number of their users.
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