I have been working with several clients to hire team members at all levels over the last few months. We have been so focused on the right person in the right seat on the proverbial bus BUT yesterday, I had an AHA moment about pricing and payroll and percentages. My usual go to plan is hire the best person for the job at a fair price and then go out and build the business. Raise prices, improve efficiencies. It all works out. We are in the poeple business and people are the very foundation of our exceptional service model.
Sometimes however, the payroll costs will become so bloated that it will be an enormous struggle to be profitable. When cash flow and profit struggle, we are in a position to feel the pressure to take on clients we otherwise may not have agreed to work with. Have you been there? You see this huge payroll looming and you say yes when you know the answer should be “no, we are not a good fit”.
This is a problem I see looming for firm owners as many seek to over-hire and fill their talent pool. Thats an expensive choice. I even heard one business owner say “oh we will just use our credit line for now”. Hmnn, I dont like it.
Lets stop and take another look at payroll as a percentage of revenue. Where are we now and where can we reasonably expect to be? Does the math work?
Reach out to me and lets discuss your payroll percentages and your 2024 plans.