Headcount Planning for Seed Stage Startup

Written by Laura Ma Nov. 21, 2022

Headcount is one of the biggest expenses of running a startup, so it pays to plan ahead. This guide is designed for pre-seed to late-seed-stage founders, executives, and recruiters alike to simplify their headcount planning process and sharpen their hiring skills.
Headcount Planning for Seed Stage Startup

About the author

Laura Ma

Laura Ma is one of our professional mentors on MentorCruise and works as Strategic & BizOps | Pitch Deck | Fundraising | GTM | Career at Multiple startups.

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What is headcount planning?

The headcount plan itself is a spreadsheet with accompanying financials and headcount (budget for each role and department.) I have the template hiring planning model built out. Please reach out if you need any help with headcount planning and I am happy to share the template with you.

The budgeting process for new headcount typically happens early in Q4 for the following year. At this point, all new positions are discussed and go through the annual budgeting process for planning and approval.

The executive team should decide how to prioritize roles — determine which three to five you’d like to recruit and what ranking roles come in after that.

Who builds the hiring plan?

For the smaller startups with 5-15 employees, the founders and executives are the direct decision-makers and plan builders.

For the larger startups which have more than 20 employees and have established the reporting structures, the hiring managers need to submit hiring request forms to the executives for approval.

Hiring plan meetings are an opportunity for the teams to calibrate overarching business goals against existing resources.

How to decide the headcount?

Here are a few points to consider when defining your headcount plan and forecast:

  • Which people do you need today, in two quarters, in a year, or even later?

  • What are the salaries for the roles in your short- and mid-term plans? Also, consider how much you should allocate for agency fees or referral bonuses for each role.

  • What’s your estimated time to hire for each role? When will each role be projected to start? How long will it take them to ramp up and become productive?

Here are some additional questions that should guide these discussions, both at the leadership and hiring manager levels:

  • Why are we adding this role?

  • In what direction will they take the company?

  • Why are we hiring for this now?

  • How will this role interact with existing leadership?

  • What does it mean to be great at this role?

  • What will their success look like in the first 6 months? The first year?

  • What companies do we admire? How have they done what they’ve done?

  • What companies obviously have top talent in this role?

  • What does the ideal candidate need to have done before in their career?

  • Who are the people doing this job extremely well right now? Do we know anyone in our network that has a great reputation or could introduce us?

  • What salary could we offer right now to acquire the top talent? What is the min and max range we could afford?

  • How should we structure the base salary and options package?

  • How should we structure the commission package for the sales or business development team?

  • How do we define our culture? What kind of talents would be a good fit for our culture?

  • How do we decide on the leveling of each role in our business? 

Given the current market situation, the founder or hiring team may also need to conduct a scenario analysis to figure out how this hiring plan may impact the financial runway in the worst-case scenario.

Headcount planning during the recession would be even harder. Having a massive layoff is one of the hardest decisions the business would like to make. So hiring cautiously and only hiring the “must-need” talents are key strategies founders or the hiring team are playing during the recession time. Besides the hiring speed, another factor that the team could control is the salary and commission package. The employees' packages in the tech industry were super inflated last year but the job market is cooling down now. As so many talents have been impacted by the massive layoffs recently, the job market has switched from the employee market to the employer market. The founders and the hiring team could leverage salary benchmark vendors to make a wiser hiring plan. By any chance you have to conduct a layoff to ensure the business could survive the recession, please feel free to reach out to me and I am happy to share my experiences and advice, including information like how to structure the layoff, how to deliver the message internally and externally, and what is the next after the layoff.

Headcount planning is not a one-time project that you could complete and then forget. Since the market has been and might be even more volatile in the next few months, it is necessary to closely track the hiring process and rewire the headcount planning on an ongoing basis. Headcount planning is tightly linked to business budgeting and growth. If the business growth slows down or the business does not hit the target, it is a “must do” to revisit the headcount planning model and even redo the whole planning to ensure the business could keep growing in a healthy way.

How to build the headcount planning model?

Using a spreadsheet-based headcount planning model is the best way to quickly plan your headcount. I have the template hiring planning model built out. Please reach out if you need any help with headcount planning and I am happy to share the template with you.

Who am I?

I have 7+ years of experience in startups fundraising, business strategy, product and pricing strategy, OKR and KPI planning, budgeting, financial projection, product management, and global market expansion. I successfully helped one startup grow from series B to D and five seed-stage startups secured series-A.

I look forward to working with founders to better project their financials, manage their relationships with investors, build up an efficient business analytics system, and secure next-round funding. I always believe that innovation motivates advancement and advancement brings hope. I am looking forward to working with you to make the world a better place soon!

If you have questions about how to advance your career path or how to join the startups, please feel free to reach out too. I am looking forward to learning about your stories and sharing mine as well. 

About the author

Laura Ma

Laura Ma is one of our professional mentors on MentorCruise and works as Strategic & BizOps | Pitch Deck | Fundraising | GTM | Career at Multiple startups.

Visit Profile

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