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2) Build your Team Forecast

Team costs on average comprise approximately 80% of a business operating expenses. As such, it is important to give careful consideration to the skills and talent needed and get this portion of your forecast right. 

Profitual Platform Guide:

Team Building Block

Steps to Build a Team Forecast:

Step 1: Existing Team

The first step in forecasting payroll is to build out your current team costs. To enable this collect the following information:

  • Employee Roles 
  • Determine department each team member should be allocated to:
    • Cost of Revenue - Directly involved in providing/creating your good or service
      • Customer support, Manufacturing salaries
    • Research & Development - create, design, and maintain your product
      • Software engineering, lab tech, product managers
    • General & Administrative - core business operators
      • CEO, Accountants, Legal, Human Resources
    • Marketing & Sales - generating leads and acquiring customers
      • Sales, marketing, business development
  • Collect the salary of each team member

Step 2: Future Team

Plan future hires your business will require to meet business objectives and when you will need those hires to be in place. Consider the following:

  • Product development - complexity, and timeline to build your product
  • Go-to-Market - when do you plan to start selling, how will you generate leads prior to sale,  who will coordinate marketing efforts
  • Customer support - when you have customers who will manage them, support issues & questions they have, onboard those customers
  • Administrative needs - what administrative needs will the business take on as it grows, when does it make sense to hire this role vs. contract in support [EX// contract bookkeepers, fractional CFO]

How much will you pay these individuals. Evaluate current team pay, market expectations for talent, your geography industry and the experience level of the hires you plan to make. 

Step 3: Taxes & Benefits

In addition to salary costs employees bring expenses for employer taxes [Employment Insurance (EI) and Canada Pension Plan (CPP) payments. As well if you plan to offer health benefits or retirement support these costs usually have an employer cost associated with them. 

  • Employer EI (2.3%) & CPP (5.95%) contributions total approximately  8.25% up to certain thresholds, this is likely a material expense to your business as you higher team members
  • Health and Benefits contributions plus retirement plan support can total another ~7% 
  • Profitual typically uses a 15% tax and benefit factor to cover these costs

Step 4: Salary Increases

Employees will expect their pay to increase overtime, at minimum to account for inflation. How often and how much of a raise will you factor in to your company plans? Note these decisions need to balance talent attraction with cost feasibility for your business.

  • Raise Percentage
  • Raise Frequency