Hiring plan in the model

People are most of burn. The financial model treats the hiring plan as the main cost engine: who joins, when they actually start, and what they cost fully loaded.

Model three things:

1. Roles and start months — when someone joins, not when you open the req.
2. Fully loaded cost — salary + benefits + taxes + equity cash impact if any + equipment. A rough load factor of ~1.25–1.4× salary is a common US planning heuristic (varies by location and benefits).
3. Ramp — new AEs produce little in month 1; engineers have onboarding cost before leverage.

Fully loaded monthly cost ≈ (base salary / 12) × load factor

Walking through a hire cohort

Hire plan adds 3 engineers in month 4 at $180k base, load factor 1.30:

Monthly cost each = (180k / 12) × 1.30 = $19,500
Team add = 3 × 19,500 = $58,500 / month from month 4 onward

On $2.5M cash and $180k prior net burn, this cohort alone moves net burn to ~$238.5k and cuts runway from ~13.9 months to ~10.5 months if revenue is unchanged. Put that in the model before approving the reqs.

Vendor and ad spend can be separate lines. If you find yourself managing 80 opex lines, roll up. Detail belongs in bookkeeping. The model needs decision levers.

Hire gate: does this hire keep us default alive under the downside case?

A 12-month sketch from the source: start $1.5M cash, 6 people, $90k/month fully loaded opex + $10k other. Each month 8 new customers × $1,000 MRR; 3% monthly logo churn; COGS 20% of revenue. No new hires for 6 months; +2 people at $20k fully loaded each in month 7.

Month 1: new MRR $8,000; COGS $1,600; opex $100k; net ≈ −$93.6k; cash ≈ $1.406M. By month 6, 3% monthly logo churn means customer count is on the order of ~40–45 (not 48). MRR might land near ~$42–45k. Gross profit ~$34–36k against ~$100k opex → net burn still ~$65k/month. Cash has fallen by roughly 6 × ~$80k average burn ≈ ~$0.5M. Month 7 adds $40k opex. The sheet exists to replace this hand-waving with a table.

Common mistakes

• Hiring in month 1 of the plan while revenue ramps in month 12 — front-loaded burn.
• Using salary, not fully loaded cost.
• Ignoring COGS step-functions — new region, new model provider, new compliance regime.

Check yourself

1. $180k base, load factor 1.30. Monthly fully loaded cost? $19,500.
2. $2.5M cash, burn goes from $180k to $238.5k. Rough new runway? About 10.5 months, down from about 13.9.

Key takeaways

• Headcount fully loaded cost is the primary burn driver.
• Model start dates and ramps, not req-open dates.
• Run the hire through downside cash before you approve it.
• Roll up vendor lines. The model needs levers, not a general ledger.

Further learning

What to do with the finished sheet: scenarios and sensitivity.