You've got product-market fit, some early revenue, maybe a seed round. Now you need people — engineers, a salesperson, someone to handle ops. The question isn't whether to hire, it's whether you can afford to.
Most founders do this maths in their head: "£50k salary × 8 people = £400k." Then reality hits. Employer NI. Pensions. Recruitment fees. Equipment. By Q3, you're £80k over budget and wondering where it went.
A realistic first-10 team
Every startup is different, but here's a common shape at seed/Series A:
| Role | Type | Salary | Loaded Cost |
|---|---|---|---|
| CTO / Lead Engineer | Perm | £90,000 | £121,350 |
| 3× Software Engineers | Perm | £65,000 ea | £255,150 |
| Product Manager | Perm | £60,000 | £80,100 |
| Head of Sales | Perm | £70,000 | £97,800 |
| Sales Rep | Perm | £40,000 | £52,200 |
| Ops / Office Manager | Perm | £35,000 | £45,450 |
| UX/UI Designer | FTC 12m | £55,000 | £69,750 |
| Employment Allowance saving | −£10,500 | ||
| Total (10 people) | £545,000 | £711,300 | |
That's a 1.31× multiplier — £166,300 more than the raw salary bill. Assumes 5% employer pension, 10% bonus for seniors, basic PMI, £2,000 IT and £3,000 office cost per person. No recruitment fees included yet.
The costs nobody warns you about
1. Recruitment fees eat your first month
If you use agencies, expect 15–20% of the first year's salary per hire. For your CTO at £90k, that's £13,500–£18,000. For 10 hires with half through agencies, you're looking at £40,000–£55,000 in recruitment fees in year one alone.
2. Equipment setup is front-loaded
Every new hire needs a laptop (£1,000–£2,000), monitor, chair, software licences, and onboarding time. Budget £1,500–£3,000 per person as a one-off. For 8 new hires, that's £12,000–£24,000 hitting your cash flow early.
3. Not everyone starts on day one
A realistic timeline might be 2 in April, 2 in June, 2 in September, and 2 in November. Your year-one cost is significantly less than 12 months × 10 people — but your year-two cost (when everyone is there for the full year) jumps. You need to see the monthly cost curve, not just the annual total.
4. Benefits creep up
At 2 people, you probably don't offer PMI or life insurance. At 10 people, your top candidates will expect it. A basic package costs £1,500–£2,500 per head. For 10 people, that's £15,000–£25,000 you probably didn't have in your original budget.
5. Salary inflation hits in year two
Even a 3% annual increase compounds across 10 people. Your £545k salary bill becomes £561k in year two — an extra £16k without hiring anyone new. Over 4 years, the same 10 people cost 12% more in base salary alone.
The Employment Allowance is your best friend
If your total Employer NI bill is under £100,000, you can claim the Employment Allowance — a £10,500 deduction from your NI bill. At 10 people, this effectively makes your cheapest hire NI-free.
Tip: the Employment Allowance is most valuable when your team is small. As you grow past 20–30 employees, the £10,500 becomes a smaller percentage of the total. Claim it from day one.
The mix matters — permanent vs FTC vs agency
- Permanent hires for your core team — the roles that define your company. Full NI + pension + benefits cost but stability and loyalty.
- Fixed-term contracts for known short-term needs. They still get NI and pension — they're your employees — but no long-term benefit commitments.
- Agency/contractors for specialist or temporary capacity. You pay a day rate with no NI, no pension, no benefits. More expensive per day, but zero ongoing commitment.
A framework for your budget
- List the roles you need in the next 12 months, with target salaries and start months.
- Apply the multiplier. Use 1.3× for a quick estimate, or calculate properly with NI (15% above £5k), pension (5%), and your specific benefits.
- Add one-off costs separately. Recruitment fees (15–20% per agency hire) and equipment (£2,000 per person) are year-one only.
- Subtract the Employment Allowance. Take £10,500 off NI if you qualify.
- Model the monthly curve. Not everyone starts in month 1. Map out when each hire joins to see the real cash flow impact.
- Project year two. Everyone is there for 12 months, plus salary increases. This is the year that surprises people.
The most common mistake: budgeting year one accurately but forgetting that year two costs 25–35% more — full-year salaries, salary inflation, and mid-year benefits becoming 12-month commitments.
What about runway?
If you've raised a £1.5M seed round and your 10-person team costs £711k loaded (plus £60k recruitment, £20k equipment), that's roughly £791k in year one. Add your existing costs, and you can see very quickly whether you have 18 months of runway or 12.
The difference between "we can hire 10" and "we can hire 7 comfortably" often comes down to the £166k gap between salary and loaded cost. Getting this right isn't a finance exercise — it's a survival exercise.
Model your hiring plan properly
Headcount Agent lets you add your team, see the fully loaded cost instantly, compare hiring scenarios, and project costs across 4 financial years. UK statutory rules built in.
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