Hiring is one of the largest commitments a small business makes, and it is often decided on a salary figure alone. The real question is what the role does to costs, to cash timing, and to capacity over the next year. A scenario answers that before you post the job.
Work out the fully loaded cost
Salary or wages are only part of the cost of an employee. Add:
- Employer payroll taxes.
- Benefits such as health insurance and retirement contributions.
- Workers’ compensation and other insurance tied to payroll.
- Equipment, software licenses, and training.
- Recruiting costs, if any.
A common rule of thumb puts the loaded cost at 1.25 to 1.4 times base pay, but your actual benefits package matters more than any rule.
Choose a realistic start date and ramp
Most roles do not produce full value on day one. Model when the person actually starts, which is usually later than hoped, and how long until they are fully productive. For a revenue-producing role, such as an estimator or a salesperson, the revenue they bring lags their cost by weeks or months.
Build the scenario separately
Do not edit your main forecast to see what the hire would do. Copy the baseline into a separate scenario, add the role with its start date and loaded cost, and add any revenue or capacity it unlocks with realistic timing. Then compare the two side by side:
- Operating profit for the year in each case.
- The thirteen-week cash outlook, especially the lowest week after the start date.
- How long until the hire pays for itself, if it is meant to.
Keeping the baseline untouched means you can test several versions, such as an earlier start, a part-time role, or a contractor, without losing track of the plan you actually adopted.
Check payroll timing against cash
Payroll leaves the bank on fixed dates. If the start date lands in a seasonal low, such as before harvest sales, before a contractor’s next draw, or between association renewal seasons, the cash outlook may dip even if the annual numbers look fine. Moving the start date a few weeks can make the difference.
Decide, then record the decision
When management chooses, adopt the scenario into the forecast and record why. If the hire does not happen, keep the scenario anyway. The analysis will be useful the next time the question comes up.
PursuitBid supports exactly this workflow. Payroll and headcount files bring in current roles, scenarios add positions with start dates and compensation, and the operating forecast and thirteen-week cash outlook show the effect side by side with the baseline.
Written by the Syntonyl team. This article is general information, not legal, tax, or financial advice.