Hiring soon? Better Understand How Much Revenue You Need to Maintain Profit Margins

Scaling a small business means hiring staff as you can’t do everything —but how much extra revenue do you need to maintain profitability??

Most small business owners don’t hire the staff they need because they struggle to get an ROI.?

So I’m sharing my startup journey and the real numbers behind growing a team while keeping your margins intact.

Let me break it down for you.?

When considering a new hire, especially a support role in admin, marketing, or sales, many small businesses don’t realise how much additional revenue they need just to break even.?

The numbers may surprise you.?

While 25% EBIT (profit margin) might sound comfortable, it’s a delicate balance that depends heavily on how efficiently you manage both costs and income.

?? Key Takeaway 1: Understand the Cost of Hiring Staff For a traditional small business, the cost of hiring a junior staff member is around $65,000 AUD/year plus benefits. If your EBIT (profit margin) is around 25%, you’ll need to generate an extra $104,000 AUD in revenue each year to justify that hire and maintain your margin.

?? Key Takeaway 2: Margins Matter – And They Vary! Your required revenue depends on your EBIT. A company with a 30% profit margin would need to bring in around $111,000 AUD annually to justify that hire.?

But, if you opt to hire remotely (like from the Philippines) at around $15,000 AUD/year, the extra revenue required shrinks significantly to just $24,000 AUD! ??

The key difference lies in the cost of hiring locally versus remotely. Hiring in Australia costs around $65,000 AUD per year, which means a company with a 25% profit margin would need to generate an additional $104,000 AUD in revenue to justify the hire and maintain profitability.?

On the other hand, if the company has a higher profit margin, like 30%, the revenue requirement increases to $111,000 AUD. However, remote hiring, such as from the Philippines at $15,000 AUD per year, drastically lowers the needed revenue to just $24,000 AUD. This illustrates how hiring remotely can significantly reduce expenses and make it easier to meet revenue targets.

?? Key Takeaway 3: Breaking Legacy Thinking Around Payroll Payroll is often one of the biggest business expenses. Yet, if you think outside the box about hiring (especially overseas talent), you may not need a massive uplift in revenue to scale effectively. ?? Even with an EBIT of 40%, you only need an additional $30,000 AUD in revenue to maintain profitability when hiring at lower costs.

?? Pro Tip: Look Beyond Local The real takeaway? Hiring remotely can dramatically change your cost structure and growth trajectory. That’s how I’ve managed to scale my business while keeping losses under $1,000 just 50 days into the journey.

???? I’m Ronan Leonard

?? Certified Innovation Professional

?? 100 days to create a profitable business. Follow the journey! Subscribe, hit the ??, or follow #100DaysStartuptoSuccess, or comment ?? to join the discussion.

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