One of the key sections of a Business Plan is the section that describes the plan to grow or scale the business.  This often involves hiring staff and staff often represent the single largest ongoing expense that a company will have.  As such, it is important to plan exactly who will be hired, how much they will be paid and when staff will join the team.

What Should a Personnel Plan Look Like?

The personnel section of a Business Plan should contain the following components.

  • Job Descriptions – The job descriptions should provide the reader with enough detail so that they understand the job function of prospective hires
  • Organizational Chart – An organizational chart show who will work for who and allows a reader to get an overview of the overall management and staffing structure of the company.
  • Type of Hire – Staff can either be salaried employees or independent contractors. It is important to distinguish between these two types of workers for tax and other labor compliance issues.
  • Salary Amount – Details of either yearly or hourly pay should be included.
  • Salary Assumptions – common assumptions include an estimate of raises over time (eg. 5%) and a burden rate assigned to cover company benefits like health insurance (eg. 20% of salary costs)
  • When Hires Will Take Place – Staff are usually hired over a period of time and staggered. As such, it is helpful to include detail surrounding when a particular employee will start. If you will have temporary staff of contractors, you should also specify when the employment will end.

What Do the Numbers Look Like?

The sample chart below is an example of the financial section of a business plan. It is for illustrative purposes only and each plan is unique and requires tailoring to meet the specific needs of the company.

  FY2015 FY2016 FY2017 FY2018 FY2019
Coder $0 $48,000 $50,400 $52,920 $55,572
Sales – 2 Sales Staff $0 $48,000 $50,400 $52,920 $55,566
Sales Manager $0 $0 $24,000 $25,200 $26,460
Marketing Head $0 $0 $0 $24,000 $25,200
Distribution Manager $0 $0 $0 $0 $24,000
Founder 1 – Founder Founder $91,667 $105,000 $110,250 $115,763 $121,551
Founder 2 $0 $100,000 $105,000 $110,250 $115,763
Founder 3 $0 $100,000 $105,000 $110,250 $115,763
Total $91,667 $401,000 $445,050 $491,303 $539,875

 

What Should the Explanation of a Personnel Plan Look Like?

The detail below is a summary of some of the possible explanation that could be included in a Personnel Plan for the above data.  The description is an excerpt of possible language that could be used.

The company will start out utilizing the three founders and salaries have been allocated for each founder at $100,000 per year. Founder 1 will start taking a salary in FY2015 while the other two founders will start taking a salary in FY2016.    Founders will also take dividends as issued by the Board of Directors.

The budget contemplates hiring 2 employees in the sales area in fiscal 2016 and one software engineer . Until that time, one of the founders who specializes in application development (Hellen Bussiere), will work on developing the tech side of the business.  In addition, the plan includes hiring 1 sales person a year after that. Sales people will make approx.. $25,000 per year.  In year 4, the application will be completed and we will hire a marketing head to promote the product. The marketing head will make $24,000 a year and will be a part time position.  In year 5, a distribution manager will be hired and he/she will also be part time and make $24,000 per year. 

Full job descriptions are included in Section A.2 of the plan. 

The total number of employees at the end of year 5 is 9 people (including the founders).  This is a modest estimate and may increase significantly if more users sign up.

All salaries include a raise estimated at 5% per year.  20% of salary costs have been included for benefits such as health care and 401K matching.

 

Scott Legal, P.C. regularly prepares business plans for E-2 visas, L-1 Visas and EB-5 visas.  We welcome the opportunity to assist you.

To find out more about business plan drafting, click here.

 

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