Financial Projections: Personnel Expenses

Financial Projections: Personnel Expenses

September 8, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

In setting up for your financial projections model, personnel is straightforward to forecast. Each employee has a salary, benefits, and payroll taxes.  

Payroll taxes are a calculation off of the salary. 

Commissions need to be included but are variable expenses related to sales.  

Benefits include things such as healthcare, retirement plans, and the like, and are defined by your providers.

As you grow headcount, it’s clear how much the budget will increase. 

Those related to the product production and delivery will go into the COGS section. 

Those related to sales, marketing, research and development, and administration, will go into the operating expenses.

You may want to divide the personnel into divisions such as sales, marketing, and product development.  You can keep the contractors in a separate category as well.

For part-time employees, compile them into an FTE or full-time equivalent employee for the calculation. 

A key metric is revenue to number of employees. Check your number against your industry standard.


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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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