I am hiring my first employee
You have more work than hours and are about to take on a fixed monthly cost.
Founder & writer — writes from experience
A salary is roughly 15–25% cheaper than the true cost once employer National Insurance, pension contributions, holiday, equipment and recruitment are added.
The decision is not 'can I afford one month' — it is 'can I afford twelve, including a quiet quarter'.
What to fix first
- 1
Model the full employment cost
Salary plus employer NI, pension, equipment, software and holiday cover.
- 2
Check the contracted revenue behind it
Committed work, not pipeline optimism.
- 3
Hold three months of the new cost in reserve
Before the offer letter goes out.
Your seven-day plan
Day 1
Define the work
Write the work, hours, output and management time the role requires before discussing a salary.
Day 2
Build the full-cost model
Include salary, employer costs, pension, equipment, software, holiday cover and recruitment time.
Day 3
Test the revenue case
Separate signed work from pipeline and test whether either can support the role through a quiet period.
Day 4
Check payroll readiness
List the payroll, right-to-work, starter and recordkeeping steps you need to complete.
Day 5
Check pension duties
Use The Pensions Regulator’s current guidance to understand when duties start and what information is needed.
Day 6
Set a cash runway
Measure how many months of the full employment cost cash can cover without new receipts.
Day 7
Choose a decision date
Proceed only after the forecast, responsibilities and budget are documented; otherwise revisit the role shape.
Numbers and documents to collect
- Role and hours outline
- It prevents the cost model being built around a vague requirement.
- Cash forecast
- It tests when the fixed cost actually leaves the bank.
- Payroll and pension checklist
- It surfaces operational duties before the start date.
A role that looks affordable for one month
A business can cover the first salary from this month’s cash but the forecast shows a customer payment arriving late in month two. Adding employer costs and equipment makes the cash low point unsafe.
The owner can change the role, delay the start or secure the revenue case. Taking credit to cover an unaffordable result does not make the role affordable.
Common mistakes and red flags
- The model only works if every prospect signs.
- You have not included employer costs or equipment.
- The role is intended to solve a persistent existing cash shortfall.
Get professional help now if…
Read these, in this order
When this path is not the right one
- If the affordability model only works with best-case revenue, consider a contractor or part-time hire first.