You are turning work away, finishing admin after dinner and thinking one more person would make everything easier. That may be true. It is still worth knowing what the decision asks of the business before the offer goes out.
A useful hiring assessment answers three questions: what will the role cost, what will it change commercially, and how much cash is needed while it gets established? The answers are connected, but they will not necessarily arrive in the same month.
Start with the job itself. Are you buying more delivery capacity, specialist capability, sales activity or time back for the owner? The financial case should match that purpose rather than assuming every employee directly generates new revenue.
Build the cost around the actual role
Include salary or wages, super, relevant insurance, software, equipment, recruitment, training and supervision. Check applicable award or agreement terms, allowances, penalties and leave loading. Payroll tax and other obligations depend on the business’s circumstances and location; do not apply a generic percentage without checking.
The Australian Government’s hiring guide covers the employment decisions and obligations to work through. The model is a planning tool, not a substitute for identifying the correct employment terms.
This fictional example assumes a salaried employee, with all salary treated as qualifying earnings for the simple super calculation. Figures are annual and exclude recoverable GST where relevant.
| Cost | Annual amount |
|---|---|
| Salary, excluding super | $90,000 |
| Super at 12% | $10,800 |
| Illustrative insurance, software, training and operating allowance | $7,200 |
| Recurring annual budget | $108,000 |
| One-off recruitment and setup costs | $6,000 |
| First-year budget | $114,000 |
The $7,200 allowance is an assumption for this example, not an industry benchmark. Replace it with quotes and costs relevant to the position. Add payroll tax, leave loading, overtime, backfill or other costs where they apply.
From 1 July 2026, the super guarantee calculation uses 12% of qualifying earnings and Payday Super changes payment timing. Check the ATO’s current Payday Super guidance and reflect the actual payroll schedule in cash planning.
Do not count the same leave cost twice
An annual salary generally continues through paid leave. Adding the full value of ordinary annual leave again to that annual salary can overstate the recurring wage cost.
Leave still matters. It reduces available working time, may involve leave loading and can require replacement cover. Build realistic productive capacity, account for applicable entitlements and budget additional backfill separately where needed. Fair Work’s annual leave guidance explains the entitlement framework and relevant exceptions.
Also allow for induction and supervision. A new employee may temporarily reduce a manager’s available delivery time before increasing the team’s output.
Calculate the contribution needed
The recurring budget above is $9,000 a month. Suppose extra sales generated by the role have a 60% contribution margin after other variable delivery costs, but before this employee’s cost. The business needs $15,000 extra monthly sales to cover the $9,000 recurring cost.
At that same margin, covering the $114,000 first-year budget requires $190,000 additional annual sales. These calculations assume no other fixed costs rise. They also assume the new salary has not already been included in the 60% margin, which would count it twice.
If the role frees the owner to sell or deliver, explain how that released time becomes measurable value. “The owner will be less busy” may be a worthwhile personal benefit, but it is different from a funded revenue assumption. Both can belong in the decision if they are identified honestly.
Allow the role time to become productive
Assume the hire contributes $3,000 after other variable costs in month 1, $6,000 in month 2 and $9,000 in month 3. Against the $9,000 monthly employment budget, the first three months create a combined $9,000 operating shortfall.
Add $6,000 setup costs and the initial funding need is $15,000 before collection delays, GST timing or other business movements. If customers pay after the work is delivered, the cash requirement can be higher even when the role reaches monthly operating break-even.
Put that ramp-up into the whole-business forecast. Existing staff, tax commitments and loan payments still need funding while the new role develops. Test a slower start rather than building the plan around immediate full productivity.
Set the review before the start date
Agree practical measures for the first few months: work delivered, capacity released, customer response times, contribution or a defined operational improvement. Review the assumptions alongside the employee’s support and training needs.
A financially sound hire can also make the owner’s working life better. The aim is to understand the price of that improvement, fund the transition properly and give the new person a role the business is ready to support.
Target Advisory 