What it actually costs every time someone leaves your business
You'd know if you were repeatedly losing £20,000 from your business, right?
Yet most business owners have no idea they're wasting at least that (minimum), every time someone leaves unnecessarily.
You might think that's utter bollocks!
But here's why £20k is actually a very generous estimate and why most founders drastically underestimate what losing staff actually costs.
What you think it costs VS what it actually costs
When someone leaves, most founders count the recruitment fee, which may be around £5k if you're using an agency. Frustrating, yes. But survivable.
That's like only counting the petrol when you commute daily and add thousands of miles on your car each year as a result.
You're ignoring everything else that's wearing out:
the tyres, the brakes, clutch and gearbox wear, suspension, cambelt, spark plugs, injectors... the list goes on.
If you only count the recruiter fee or the cost of the advert you placed, then you're missing the majority of the cost of replacing them!
So here's what it actually costs every time someone leaves your business...
The Real Cost When Someone Quits: 6 Hidden Expenses You're Not Counting
1. Recruitment costs
Let's start with the obvious one:
Agency fees (typically 15-25% of salary, so £5,250 to £8,750 for someone on £35k)
Job board ads if you're doing it yourself (£200-500 per role)
Your time screening CVs (how many hours? 5? 10? What's your time worth? Let's say £100/hour minimum as a founder; that's £500-1,000)
Interview time (three rounds totalling 2.25 hours each for you and a manager = 4.5 hours at an average of £85/hour = £380)
Running total so far: £6,330 to £10,630
2. Training and onboarding time
This is where the cost of replacing people gets expensive and it's the part most people completely underestimate.
Your new hire isn't productive on day one, in fact, they're not even productive in month one.
Realistically, it takes 6-9 months before someone new is operating at 100% capacity in a knowledge-based role. Some research suggests it's even longer and can take up to 12 months for more complex positions.
During those 6-9 months, you're paying them their full salary while they're:
Learning your systems
Understanding your clients
Getting up to speed on your processes
Making mistakes (we'll come to that)
Asking questions that take your team's time to answer
So for someone on £35k, that's roughly £2,917 per month in salary.
But they're only operating at maybe 30% capacity in the first month, 40% in month two, 50% in month three, 60% in month four, 70% in month five, and 80% by month six.
The productivity gap i.e: the difference between what you're paying them and what they're actually delivering, is significant.
Over those first 6 months, the average productivity is around 55%, which means there's a 45% productivity gap, equivalent to about 2.7 months of full salary: £7,875
Running total: £14,205 to £18,505
3. Time cost to your existing team
But it's not just their time, it's your team's time too! Someone has to train the new person, answer their questions, check their work, redo things they got wrong.
Let's say that takes up 20% of one senior team member's time for the first 2 months. If that person earns £50k (£24 per hour), that's 8 hours per week for 8 weeks = 64 hours at £24/hour = £1,536 (let's round to £1,600)
Running total: £15,805 to £20,105
Still not done...
4. Mistakes, rework, and missed opportunities
It's inevitable that the new person will make mistakes because they don't have the context, the relationships, or the deep knowledge of how things work yet.
Maybe they mishandle a client email and you have to smooth things over.
Maybe they miss a deadline because they didn't know it was critical.
Maybe they approach a project the wrong way and it needs redoing.
Maybe they miss an opportunity a more experienced person would have seen.
This is hard to quantify precisely, but if we're being realistic, there's at least £2,000-3,000 in mistakes, rework, or missed opportunities during that learning period.
Running total: £17,805 to £23,105
5. The workload on your existing team while the role is vacant
Here's what most people completely forget: the work doesn't just disappear when someone quits!
For the 4-8 weeks (this is a generous timeline btw!) between them leaving and the new person starting, that work has to go somewhere.
Usually, it falls to your existing team... or you.
Your team is now:
Doing their own job
Covering the vacant role's most critical tasks
Probably working extra hours or dropping less urgent work
Getting more stressed, pissed off and burned out
If this goes on too long or happens too often, you may lose more people because they're exhausted from picking up the slack.
Let's conservatively estimate this adds 10 hours per week of extra work spread across your team, for 6 weeks (notice period + time to hire).
That's 60 hours. If the average hourly rate of the people covering is £25/hour, that's £1,500 in additional cost.
But the real cost is the morale hit and the increased risk of losing more people, which could cost you another £20k per person.
I won't add that to this calculation, but it's worth remembering.
Running total: £19,305 to £24,605
6. Your time and headspace
Finally there's the cost that nobody ever accounts for: your time.
As an owner or founder, your time is your most valuable resource and every hour you spend on recruitment, onboarding and fixing is an hour you're not spending on:
Winning new clients
Developing your product
Building strategic partnerships
Growing your business
Let's say you spend 20 hours total on the full cycle of someone leaving and being replaced (interviews, onboarding, dealing with the handover, managing the impact on the team)… if your time is worth £100/hour (and it probably should be more!), that's £2,000.
But the opportunity cost is even higher.
What could you have achieved with those 20 hours if you'd spent them growing the business instead?
Final total: £21,305 to £26,605
And remember: this is for someone on a £35k salary AND we've been conservative with every estimate.
What the cost of staff leaving means for your business
If you're losing 3 people a year, that's roughly £60,000-75,000 gone. Every year.
If you're in that revolving door phase where you're losing 5, 6, 7 people, then you're burning through six figures every year.
For someone on £50k, the cost when they quit jumps to £28,000-35,000.
For someone on £70k, you're looking at £35,000-45,000 every time they leave.
Now multiply that by how many people you've lost in the past 12 months.
That's your real number.
Calculate what people leaving is actually costing you
If reading this has left you feeling sick - good!
Now is the time to stop guessing and get the actual number.
List everyone who's left in the past 12 months.
For each person, calculate (roughly, you don't need to be exact):
Recruitment costs (agency fees, job ads, your time interviewing)
Training time (their salary for the first 6 months, accounting for the fact they weren't fully productive)
Time cost to your team (who trained them? How much of their time did it take?)
Mistakes and rework (take your best guess - what went wrong while they were learning?)
Your time (how many hours did you spend on recruiting, onboarding, managing the situation?)
Add it up. That's what this is actually costing you.
Now ask yourself: if you were losing this much money in any other area of your business,
would you still be ignoring it?
Sure, some people will leave for reasons outside your control but the good news is that the majority of your leavers are preventable and that means it's fixable.
You just need to see the real cost first.
Because once you see how much it's costing you to keep replacing people, investing in keeping them starts to look like the bargain it actually is.
p.s. I've created a calculator that does this maths for you in about 5 minutes. You can check it out on my Resources & Learning page if you like!
