Chapter 3-
Labor Efficiency
For Most Professional Service Businesses, Labor is the Elephant in the Room
In this FREE chapter download, we dive into a critically important aspect of your business and that is….labor. For many of you, labor is your number one cost of sale but unfortunately, it doesn’t receive the level of analysis to assess how well that cost of sale is performing. There are a lot of reasons for that but if you’re not managing it, you’re not going to improve it.
We will dive into some calculations around labor efficiency ratios (direct and management). Direct labor is specifically tied to driving revenue whereas management-labor is considered overhead.
We will end the chapter by answering a business question around how much does a salesperson needs to perform based on hiring him/her at a particular salary level.
This chapter will provide perspectives on:
- The importance of understanding labor in a service-based business
- Methods for how to calculate labor efficiency
- How to start employing labor efficiency data to answer some important questions
Out of this chapter, I want you to be thinking about:
- Do I have the data from my financials set up in such a way to measure labor efficiency?
- How well do I really know the efficiency of my employees performing similar functions?
- If I had access to labor efficiency data, what kind of decisions might I be able to make?
About Stride:
Stride is an outsourced bookkeeping and accounting services firm founded by entrepreneurs to support high growth professional services firms. Our clients include marketing agencies, design firms, consulting firms, and other tech-enabled service providers ranging from $1 million to $10 million in revenue.
We’re committed to helping business owners with a thirst for continuous improvement achieve their highest and best use, whatever that may be.
As entrepreneurs, we know how important trust and confidence is in your back office. Why? So you can focus on achieving your highest and best us. The opportunity for business owners is to work on their business and not in their business. But if the back-office processes and systems aren’t delivering the information necessary to make better strategic decisions, owners find themselves drawn back into the fray. At Stride, all of our energy is around team, process, and technology designed to improve cash flow and profit while allowing business owners to chart their future with confidence.
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