“Spoiler alert,” warned the company’s managing director Rachael Chadwick-Harrison at the beginning of the podcast.

 “Salary is just the tip of the iceberg. There are so many other hidden costs that business owners forget until it starts biting them in the balance sheet.”

She began with a typical example. “Let’s say you’re hiring a Marketing Executive on a £35,000 salary. Sounds simple, right?”

But here’s what you also need to budget for:

·         Employer’s National Insurance - currently at 15% over the threshold (and yes, it went up recently)·         Pension contributions - at least 3% for auto-enrolment, often more in practice·         Holiday pay·         Software and equipment - think laptops, email accounts, CRM licenses and more.·         Onboarding time - your team will be training, mentoring and covering gaps, all of which has a cost

“And don’t forget the oat milk in the fridge if you’re hiring Gen Z!” she quipped.Based on client experiences, one of the biggest mistakes Chadwick’s sees is that of business owners forgetting the cost of ramp-up time. “Most new hires take 3-6 months to become fully productive,” Rachael pointed out. “That’s time (and money) spent before you see a return on your investment.

“Then there’s the culture cost. A bad hire doesn’t just hit your bottom line: it can tank morale. That’s why it’s worth budgeting time for interviews, cultural fit assessments and even psychometric testing. Better a week hiring than six months regretting.”

Rachael went on to cover other considerations: what she calls The Not-So-Fun (But Necessary) Stuff.“Even before your new hire starts, there are legal and compliance costs, which can include contracts and employment documents, Right to Work and DBS checks, payroll setup and pension enrolment, and HR onboarding processes. Some of our clients have spent more on employee compliance than they do on their staff Christmas party. And that’s no joke…”

She also had some cautionary tales. “Upfront costs like recruiter fees or sign-on bonuses need to be mapped alongside your revenue cycles,” she warned. “Don’t hire your dream team in Q1 if your cash doesn’t come in until Q3. One of our clients pre-hired staff for a new project before a contract was signed. The deal fell through. The team was already onboarded. The fallout? Redundancies, severance costs, and some seriously tough conversations. So don’t hire on hope. Budget based on signed deals, not verbal agreements.”

The podcast closed with Rachael offering a number of ‘takeaways.’ 

“You should always budget for at least 30% on top of base salary to cover true employment costs, allow for productivity lag and staff turnover, and set aside contingency for tech, HR support and unexpected gaps. Be realistic, not romantic. Hiring is a strategy, not just a spend.”

·         The regular series of For Finances Sake podcasts from Chadwick’s are available on Spotify, Amazon, YouTube, Apple and Podbean. For more information, go to the website at www.chadwickaccountants.co.uk