So far in our forecasting series, we’ve covered the need, process, tools and frequency for forecasting your business. The more detailed your forecast is the more useful it will be. This post is about staff forecasting. Since forecasting is about anticipating the changes in your business, staff planning is a major element of that.
In most businesses, people are the biggest cost in the production of your product or the delivery of your service. Accordingly, crunching the numbers on the cost of your staff and future hires is critical to have a useful forecast.
Every business owner knows the “cost” of an employee is far more than their compensation. There are also payroll taxes, benefits, training, supplies, tools, etc. The list goes on. Proper staff planning will help you do a better job of knowing what a new hire requires of your budget and how much revenue needs to be generated to cover the additional expense.
In the forecasting process, I recommend, whenever possible, building a table that lists every employee along with their compensation, taxes, benefits etc. This becomes useful with frequent forecasting because it’s easy to make changes when positions shift and to add new line items for promotions, replacements, and planned new hires.
I recommend adding every detail about the compensation and other costs in the table for each employee. This is one area where percentages and estimates is not advised. If you’ve not done this before, you might be surprised to see the total investment in each of your staff!
I have had great success using the Formstack platform as a cloud based staff and benefits suite for company’s large and small. You can also check out these great articles on developing a staff plan from SHRM, Motley Fool, and LucidChart.
Here is another great resource: How Should You Choose a Staffing Agency?