Ok, so an odd title for a business blog, but I thought that I would share this as I have just written it in a note for a board meeting where our MD is proposing her expansion plans for the coming year.
It is a startup business and the proposal is to increase headcount by 4-6 in Q1. This in itself isn’t odd however what so many new start businesses forget is the hidden costs of staff.
In this case:
You have the recruitment costs. The salary, the NI & any other benefits (i’ll assume that you have worked these into your plan)
But have you factored in they are going to need:
A computer – Circa £800 with software
A telephone, extension & line – £80 a month??
Don’t worry i’m not talking about the extra loo paper or anything, but where are the new staff members going to sit & work?
Desk – £200
Chair – £80 at the least
Plus is there enough office space for this desk? If not has this been taken into consideration? That could cost £1,000, possible even £10,000′s
If you are in a serviced office there will be a standard cost per desk/user of around £150 in London.
So ask yourself this:
Do you need to see your staff?
Do they need to be office based?
Most importantly ask the question:
Do I need a human to do this, or is there a technology answer?
A lot of the time the answer will be no, but still ask the question and don’t forget if you are able to add an extra process or system or bespoke application to your business without increasing your head count and cost base then you have most probably increased your sale multiple on exit.