Hiring economics

Can I afford to hire another employee?

The right question is not whether the company can cover a salary this month. It is whether the hire fits the cash plan, margin structure and expected revenue path under more than one scenario.

Start with the fully loaded cost

Salary is only one component. Include payroll taxes, benefits, recruiting, equipment, software, travel and any management or support cost that increases because of the role.

Then model timing

A new hire may begin consuming cash months before the revenue or productivity benefit appears. The model should reflect start date, ramp period and when the expected benefit actually reaches the P&L and cash flow.

Run three cases

Base: the expected ramp and revenue assumptions.
Downside: slower revenue, delayed collections or a longer ramp.
Upside: stronger utilization or earlier productivity.

Decision rule: a hire is easier to approve when the downside case does not push cash below management's minimum acceptable floor.

The quickest next step

If you do not currently have a model that can answer this question, start with the FP&A Maturity Assessment or use the Cash Runway Calculator to see whether cash visibility is already a planning gap.