The Three Numbers to Review Before Any Hiring or Pricing Decision
A hiring decision or a pricing change rarely fails because the idea was wrong. It fails because it was made without reference to three numbers that most growing organisations already hold, but rarely review together before committing. For a business in the two million to ten million dollar range, where a single appointment or a single price list can meaningfully move the result, this review takes less than an hour and removes most of the guesswork from the decision.
The First Number: Cash Position
A bank balance is not a cash position. A cash position is what remains once committed outgoings, including wages, loan repayments, supplier terms and tax obligations already accrued, are accounted for over the next three months. Many hiring decisions are made against the bank balance on the day, rather than against the balance once the new salary, superannuation and on-costs are layered in for a full quarter. The question worth asking before any new commitment is not whether the funds exist today, but whether they will still exist in month three if revenue arrives a few weeks later than planned.
The Second Number: Margin by Service or Product
Overall revenue growth can sit alongside a quiet decline in profitability, because not every service or product carries the same margin. A pricing decision made against an average across the whole business can leave the most profitable lines underpriced and the least profitable lines subsidised. Before any price list is changed, or any new offering is added, it is worth knowing the margin of each service or product individually, not blended into a single company-wide figure. This is usually the single most revealing number in the review, and frequently the one an organisation has not looked at closely for some time.
The Third Number: Delivery Capacity
The final number is the one most often assumed rather than measured: whether the business can actually deliver more of what it sells, with the people and systems it currently has, before a new hire is justified or a new client commitment is made. Growing revenue without growing delivery capacity shows up later as missed deadlines, declining quality or unpaid overtime, none of which appear in the numbers until the damage is already done. A short, honest assessment of current capacity against committed and pipeline work will usually show whether a hiring decision is overdue, premature, or solving the wrong problem entirely.
Bringing the Three Together
None of these three numbers is difficult to produce individually. The value lies in reviewing them together, on a single page, before a hiring or pricing decision is finalised rather than after it has already been acted upon. A business with a sound cash position, healthy margin on the relevant service line, and genuine spare delivery capacity has a straightforward decision in front of it. A business missing any one of the three does not necessarily have the wrong idea, but it does have a decision that needs a different shape, a different timing, or a different funding approach before it proceeds.
This simple monthly review is one of the first disciplines a Virtual and Fractional CFO and strategic finance advisory engagement puts in place, because it converts a decision that would otherwise rest on instinct into one that rests on three numbers the organisation already has, reviewed together and reviewed on time.
To see where your own organisation stands across cash, margin and delivery capacity, start your Finance Diagnostic at strikingfigures.com.au.
