Most workforce planning content is written for companies with 500 employees and an HR department. If you run a business with 10 to 80 people and $2M to $10M in revenue, that advice is useless. You do not need a workforce analytics platform. You need to answer a handful of concrete questions: how many people do I need to hit my revenue target next year, what skills are missing, who could leave and what happens if they do, and should the next role be a hire, an outsourced function, or a piece of software.
This guide covers each of those questions with worked examples at SME scale. The median Australian SME with 20 to 199 employees turns over roughly 15% of its workforce each year, according to the ABS. That means if you have 30 employees, you are likely losing four to five people annually. Without a plan, each departure is a crisis. With one, it is a budgeted line item.
Strip away the consulting jargon and workforce planning is just three things: knowing what work needs to be done to hit your targets, knowing what your current team can and cannot do, and having a plan to close the gap. For a $3M professional services firm growing to $5M, that might mean working out that you need two more client-facing staff and one more operations person, identifying that nobody on your current team can run the Xero reporting your larger clients will need, and deciding whether to hire someone with that skill, train an existing team member, or outsource the function entirely. That is workforce planning. No frameworks, no matrices, no three-day offsite required.
The simplest and most useful approach for SMEs is to link headcount to revenue. Start with your revenue per employee ratio and use it to project forward.
Apex Consulting currently generates $3.2M in revenue with 18 employees. That gives a revenue per employee of $177,778. The owner wants to grow to $5M over the next two years. Our revenue per employee benchmark tool lets you compare this against industry averages.
Target revenue: $5,000,000
Current revenue per employee: $177,778
Required headcount at current productivity: $5,000,000 / $177,778 = 28 employees
That means 10 additional hires over two years, or roughly five per year.
But this assumes productivity stays flat. If Apex invests in automation (better project management software, automated invoicing, streamlined onboarding), they might push revenue per employee to $200,000. At that ratio, they need 25 employees instead of 28, saving three salaries or roughly $270,000 per year in total employment costs.
This is why workforce planning and technology investment are connected. Every $10,000 increase in revenue per employee across a 20-person team reduces headcount needs by roughly one full-time equivalent. You can use our employee cost calculator to model what each additional hire actually costs (salary plus super plus payroll tax plus equipment plus onboarding time).
Your headcount plan must account for replacement hires, not just growth hires. If your turnover rate is 15% and you have 18 people, you should budget for two to three replacement hires per year on top of your growth hires. That changes the plan from five new hires per year to seven or eight. Our employee turnover cost calculator helps you estimate the total cost of each departure, including recruitment, training, and lost productivity. For broader turnover benchmarks by industry, see our Australian employee turnover statistics resource.
A skills gap analysis at SME scale does not require a competency framework or a talent management system. It requires honest answers to two questions for every function in your business: what do we need this function to do in 12 months, and can the current person (or people) do that?
For each role or function, categorise it into one of four buckets.
Covered: The person in this role has the skills needed now and for the foreseeable future. No action required.
Trainable: There is a gap, but the current person can close it with training or development. Identify the training needed and budget for it. This is almost always cheaper than hiring.
Replacement needed: The gap is too large for the current person to close, or the person is likely to leave. You need a hiring plan for this role.
New role needed: This function does not exist in your business yet but will be required. Common examples for growing SMEs include a dedicated finance manager (often needed between $2M and $5M revenue), an operations coordinator, or a dedicated HR person. Our guide on when to make your first finance hire covers the financial thresholds that typically trigger this decision.
Apex Consulting runs through their functions. Operations manager: covered (strong performer, no gaps). Senior consultant team (3 people): one is trainable (needs advanced financial modelling skills, can upskill with a short course costing $2,000), one is a replacement risk (has flagged interest in leaving, no succession plan). Finance: currently handled by the owner and a part-time bookkeeper. As revenue grows past $4M, this becomes unsustainable. New role needed, or outsource the function. For the cost comparison between hiring and outsourcing finance, our hire vs outsource calculator runs the numbers. HR: does not exist. Currently the owner handles all people matters. With 18 staff growing to 28, this is a new role needed.
Total cost of the skills gap: one short course ($2,000), one urgent replacement hire (recruitment cost roughly $15,000 to $25,000 via agency, or lower through direct channels), one new finance function (outsourced at $2,500 to $5,000 per month, or a full-time hire at $90,000 to $120,000 plus super plus on-costs), and one new HR function (similar outsource or hire decision). This gives the owner a concrete budget number rather than an abstract worry.
In a large corporation, succession planning means identifying potential leaders three tiers down the organisational chart. In an SME, it means answering one question: if this person left tomorrow, what would break?
For most SMEs, the critical risk sits in three to five roles. Often it is the owner (who holds all the client relationships), the most senior technical person (who knows the systems inside out), and the person who runs payroll and finance (because nobody else understands the process). If any of these people leave without a transition plan, the business takes a material hit.
Step one: document the knowledge. For each critical role, write down the five to ten most important processes that person manages. Not a 50-page manual. A one-page process summary for each task, stored somewhere the team can access. If the only person who knows how to run payroll leaves, and the process is not documented, you have a genuine operational risk. Our employee onboarding checklist includes a section on knowledge documentation that applies equally to succession planning.
Step two: cross-train a backup. For each critical role, identify one other person who could perform the core functions at an acceptable (not perfect) level. This does not mean they take on the role permanently. It means the business can operate for four to eight weeks while you recruit a replacement. Invest in the cross-training now, before you need it. The cost of training someone for two hours a month is negligible compared to the cost of a knowledge vacuum.
Every time you identify a gap in your workforce plan, you face a three-way decision. Each option has different cost profiles, risk profiles, and lead times.
Hire when the work is core to your business, ongoing, and requires deep integration with your team. Client-facing roles, senior leadership, and roles that require significant institutional knowledge are almost always better filled internally. But be realistic about the cost. A $90,000 salary becomes roughly $115,000 to $125,000 when you add superannuation (12%), payroll tax (if above the threshold), workers compensation insurance, equipment, and onboarding time. Use our can I afford this hire tool to run the numbers before committing, and our when should I hire tool to assess timing. For a broader look at employment costs by state, our guide on how much it costs to employ someone in each Australian state breaks down the differences.
Outsource when the function requires specialist skills you cannot attract or retain at your scale, when the work is important but not core (finance, HR, IT support), or when you need flexibility to scale up or down without the cost and complexity of hiring and firing. A full-time finance manager costs $100,000 to $130,000 plus on-costs. An outsourced embedded finance team delivering bookkeeping, reporting, payroll, and CFO-level oversight starts from $1,500 to $6,000 per month. The cost difference is significant, particularly for businesses in the $2M to $5M range where a full-time hire is hard to justify but the need is real. Our article on in-house finance manager vs outsourced finance team covers this decision in depth.
Automate when the task is repetitive, rule-based, and does not require human judgment. Common candidates for SMEs include invoice processing and payment reminders (tools like Xero, MYOB, or accounts payable automation software), leave and timesheet management (Employment Hero, Deputy, or similar), data entry and reconciliation, and customer onboarding workflows. The key question is whether the automation genuinely removes work from someone's plate, or whether it just shifts the work to managing the tool. A $50 per month software subscription that saves five hours a week is a clear win. A $500 per month platform that requires three hours a week of maintenance is marginal. Our guide on best business management tools for Australian SMEs reviews the options by category.
A workforce plan for an SME does not need to be a 30-page strategy document. It needs to answer five questions, reviewed quarterly.
One: What is our revenue target for the next 12 months, and how many people do we need to deliver it? Use the revenue-per-employee calculation above. Factor in productivity improvements from any planned investments.
Two: Who are we likely to lose? Apply your historical turnover rate. If you do not track this, start. Even a rough estimate is better than zero visibility. Consider who has been in their role for more than three years without progression (higher flight risk) and who has flagged dissatisfaction in any form.
Three: What skills gaps will we face? Run the four-bucket analysis described above. Flag any functions where a single departure would cause significant disruption.
Four: What is the total cost? For each planned hire, calculate the fully loaded cost (salary plus super plus payroll tax plus workers comp plus equipment plus recruitment cost). For outsourced functions, use the monthly fee. For automation, use the annual software cost plus implementation time. Add a contingency of 10% to 15% for unplanned hires.
Five: Does the P&L support it? Your total people cost (wages plus outsourced services plus contractor costs) as a percentage of revenue should align with your industry benchmarks. For professional services, 50% to 65% is typical. For trade-based businesses, 30% to 45%. If your plan pushes people costs above these ranges, either the revenue target needs to increase or the headcount plan needs to be trimmed. Our profit and loss health score tool benchmarks your current position against healthy ranges.
Workforce planning for a small business means forecasting how many people you need to deliver your revenue targets, identifying skills gaps in your current team, planning for staff turnover, and deciding whether to fill gaps by hiring, outsourcing, or automating. It connects your people decisions to your financial plan.
Divide your target revenue by your current revenue per employee. This gives you the headcount required to deliver that revenue at current productivity levels. Adjust for any planned productivity improvements and add replacement hires based on your historical turnover rate.
A skills gap analysis compares the capabilities your business needs to the capabilities your current team has. At SME scale, this means going through each function and asking whether the current person can do what will be required of them in 12 months. If not, you decide whether to train them, replace them, or create a new role.
Identify three to five roles where a sudden departure would cause significant disruption. For each, document the critical processes the person manages and cross-train at least one other team member to cover the essential functions. The goal is not to have a permanent replacement ready. It is to ensure the business can operate while you recruit one.
Outsource when the function requires specialist skills that are hard to attract at your scale, when the work is important but not core to your competitive advantage, when you need flexibility to scale up or down, or when the cost of a full-time hire is not justifiable relative to the hours of work required. Finance, HR, and IT support are the most commonly outsourced functions for SMEs in the $2M to $10M range.
It varies by industry. Professional services firms typically spend 50% to 65% of revenue on people. Trade-based businesses run at 30% to 45%. Retail and hospitality are often 25% to 40%. If your people costs are significantly above these ranges, either your pricing is too low, your productivity needs improvement, or you are overstaffed relative to your revenue.
Quarterly is ideal for most SMEs. Align it with your financial review cycle. At minimum, review the plan whenever you win or lose a major client, when revenue growth or decline materially changes your outlook, when a key team member resigns, or when you are preparing an annual budget.
Revenue per employee is your total revenue divided by your headcount. It measures how productively you convert labour into revenue. A higher figure means each person generates more output. Tracking this over time tells you whether adding people is actually driving proportional revenue growth or just adding cost.
Scale Suite is a Sydney-based provider of outsourced HR and finance services for Australian SMEs. We deliver payroll processing, recruitment support, employee onboarding, employee development, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented HR processes and reactive people management with one responsive HR function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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Disclaimer: This article is general information only and does not constitute employment, financial, or business advice. Workforce costs, benchmarks, and turnover rates vary by industry, location, and business circumstances. Always seek advice specific to your situation from a qualified professional.
Sources:
ABS, Job Mobility, Australia (February 2024)https://www.abs.gov.au/statistics/labour/employment-and-unemployment/job-mobility/latest-release
ABS, Australian Industry (2023-24)https://www.abs.gov.au/statistics/industry/industry-overview/australian-industry/latest-release
ATO, Small Business Benchmarks (2022-23)
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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