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Billable vs Non-Billable expenses
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KEY ASSUMPTIONS
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Target Revenue$5,000,000
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Target Payroll % of Revenue45%
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Role
# of People
Comp per YearTotal CompBillable?Notes
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LEADERSHIP
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CEO / Founder1$250,000$250,000PartialOften billable on key accounts
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SALES & MARKETING
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Head of Sales1$180,000$180,000Overhead
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Sales Rep / BDR2$85,000$170,000Overhead
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Marketing Manager1$95,000$95,000Overhead
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DELIVERY
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Delivery Director1$175,000$390,000BillableHead of Client Services
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Senior Consultant3$130,000$390,000BillableStrategists / Leads
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Consultant / Specialist5$90,000$450,000BillableCore delivery team
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Junior Consultant3$65,000$195,000BillableAnalysts
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Project Manager2$85,000$170,000Partial~70% billable
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OPERATIONS
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Finance / Controller1$120,000$65,000Overhead
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Operations Manager1$65,000$65,000Overhead
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SUMMARY METRICS
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Total Headcount21
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Total Compensation$2,420,000
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Payroll as % of Revenue48.4%
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Revenue per Employee (RPE) (if targeted revenue met)$238,095
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Billable FTEs14
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Overhead FTEs6
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Billable : Overhead Ratio2.3: 1
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Billable : Overhead Comp ratio1.82: 1
<< in this case although the billable headcount is 14 vs 5 overhead (2.8:1), the compensation rate is 1.82 : 1 meaning that non-billable employees are much more expensive
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Effective hourly rate$186.00
<< this is how much you need to get from every hour of billable staff (with 160 hrs/month)
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INDUSTRY BENCHMARKS
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Target RPE (Consulting)
$150K - $250K
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Target Payroll %40% - 50%
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Billable Utilization Target75% - 80%
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Gross Margin Target50% - 60%
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Operating Margin Target15% - 25%
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