Can we afford another hire? A five-minute way to answer
By Chris Greco, Founder and President.
Take the loaded cost of the hire, salary plus about 25% for taxes, benefits and equipment, and put it on the 13-week forecast as a weekly line. If ending cash stays above your floor in every week, you can afford it now. If it dips, the forecast tells you which month you can.
A $75k hire is roughly $1,800 a week loaded. On a forecast with a $50k floor and a week-7 dip to $12k, the hire waits until the week-9 collections land. The answer is rarely no. It is usually "yes, in March."
Then put the hire on the annual forecast and ask what it has to produce, in revenue or in hours you get back, to pay for itself by month nine. Write that number down. Review it in month nine.
Chris Greco
Founder and President, CFO Anywhere. CFO for owner-led companies since 2002. Executive MBA, Gies College of Business, University of Illinois.
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