Small Business Trends

Spending a dollar in business costs way more than a dollar.

How much does it cost to pay a person, let’s say, $40,000 a year?  With labor burden and overhead, it’s likely $60,000.  But wait, how much do we have to sell to pay them that?  $60,000 divided by our gross margin on sales of (let’s say it was) 40%, equals $150,000.

Using a 40% gross margin, we have market and sell and deliver $150,000 of business to pay an employee ($769 a week) $40,000 a year.  So in this example, for every $1 in payroll, our breakeven goes up by $3.75.

 

Does that explain something about what’s happening in your business?

 

 

 

Want More "Daily Motivational Tips?"

• Trust Is Extremely Important
• What Is Your Job Description?
• Make Your 2013 Goals A Reality