You know that labor costs are the highest expense in your service business, accounting for up to 70% or more of the total labor costs. Or, if you're thinking of starting a business, it's a harsh fact you'll soon discover. Rising wages make it tougher than ever to grind out a profit. You can no longer wait until the end of the month to see how the numbers shake out. You have to breathe your labor costs and, equally important, know how wages impact your job budget numbers.
You know the magic number you need to make payroll. Do you only know the big picture - if you hit your number, or do you also know where your winning and losing jobs are? Every contract is a piece and part of that whole, like every player on your fantasy football team.
To Win, You Must Control Labor Costs
According to the U.S. Bureau of Labor Statistics' recent "Employment Cost Index Summary," labor costs increased 7.1 percent for service occupations for the 12 months ending in December 2021.(1)
Rising, unchecked labor costs will kill your company.
Labor-related Factors that Lose the Profit Game:
#1: Employees spend more time on a job than you estimated
#2: Employees call out, and supervisors or higher-skilled, higher-paid employees fill in
#3: Shortage of employees with specific skills
#4: Unplanned overtime costs 1.5 times what you estimated on a job
#5: Unforeseen drive time
Speaking of overtime, the California state assembly recently proposed bill AB2932 to reduce the workweek from 40 hours to 32 hours (for companies with over 500 employees).(2) This proposal would impact 2000 businesses, resulting in employees who hit overtime quicker. As we know, trends often start on the West Coast and move east.
The economic climate for small businesses isn't getting easier. You need a secret weapon to control labor costs.
Use Technology to Fight Rising Labor Costs
If your employees have a smartphone and 17 seconds, you have a secret weapon. Your workforce can clock in and out to create accurate time cards with our time clock app. These accurate time cards produce the best job cost reports in the timekeeping industry to help control labor costs.
17 seconds with our employee time clock app gives you:
- The number of hours your employees worked at each job site -- by employee and total
- The actual hours worked compared to the scheduled or budgeted hours
- The labor dollars spent each week for each customer compared to your budgeted dollars
- The overtime dollars spent each week at each customer
- The travel pay spent on each employee and job site
- The total labor dollars and labor hours each week across all jobs
- A list of employees approaching overtime each week
- Labor hours and dollars forecasted into the future
More Ways to Manage Your People in 17 Seconds
Get Your Dream Back With Our Time Clock App
Get the information you need when you need it - now! Because now is when the game is won or lost. It's crucial to immediately identify and fix labor problems, not after employees submit handwritten timesheets. Your company can't win long-term using an old playbook.
Let us help you control labor costs. Put your secret weapon in the game.
Footnotes
(1) https://www.bls.gov/news.release/eci.nr0.htm
(2) https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2932
Conclusion
https://www.chronotek.com/blog/control-labor-costs
By embracing these solutions, you can simplify payroll processes, reduce administrative burdens, eliminate time theft, and minimize costly mistakes. Invest in an automated time clock system to save time and money while ensuring accurate and efficient payroll calculations. With the right tools and processes, you can focus on more strategic aspects of your business and watch your profits grow.
