Productivity and Profit Margins
Unless your company is dedicated to simply providing employment for your staff, profit is important. Productivity determines profit margins in most cases. Too many companies do not really know their true profit margins and what they are taking home after all expenses are covered. How productive and valuable are you to the company and what is your true compensation?
Following are a few points to consider:
1.Your time and effort should be part of the expense of operating a contract. Granted, when first starting out you and perhaps family members are putting in “sweat equity” to get the business off the ground and your unlimited labor is a given. The unfortunate thing is that too many owner/operations of custodial businesses do not factor in their labor and efforts even after the company has become successful.
2.If you had to hire someone to replace your work/time/effort during an operation or leave of absence, what would you have to pay? This should include a reasonable wage, benefits, vehicle, gas allowance, phone and other perks to keep this valued person on staff.
3.What is your knowledge and your contacts worth to the company? What would it cost to hire someone to replace you and your efforts?
4.Give a dollar value and factor those costs into your current margins.
5.What would this additional cost do to your profit margins?
6.Break out all your costs looking for “leaks” that can impact your bottom line and impact your profit margins.
Realize that if you do not start capturing your costs so that eventually you can clone or replace yourself and your efforts, you have simply taken on a rather low paying job with the very worst boss you can have: yourself.
Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean…
Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.