If you own a service business in today’s economy, or you’re thinking of starting a business, your primary concern is how to control labor costs. But can we step back and talk about fantasy football for a moment? One aspect of managing a fantasy football team is similar to running a service business with hourly employees. You may have a weakness at a position that damages your team if not identified and addressed.
For example, your fantasy football league platform, such as ESPN, projects the total number of points your starting lineup will score. If you hit your projections and win, you may move on to the following week. But pause and see how the points came. Did your QB score only 10 points instead of his projected 20, and did your running back double his projections to make up for it? This imbalance can happen in your service-based business, and you don’t want to miss it. You may have a remarkable month with a customer, and labor costs are unusually low. If you’re not tracking job costs, the stellar month with this one customer may hide another contract in which you lost money.
You know the magic number you need each week to make payroll. Every customer is a piece and part of that whole, like every player on your fantasy team. Do you only know the big picture – if you hit your number, or do you also know where your winners and losers are? This question demands an answer if you’re going to control labor costs successfully.
To Win, You Must Control Labor Costs
For most service-based small businesses, the highest expense is labor, accounting for up to 70% or more of the total labor costs. And unfortunately, this number is rising. 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.
Rising, unchecked labor costs will decimate 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
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). 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. Your team needs a secret weapon to control labor costs.
Use Technology to Manage 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 total labor dollars and labor hours each week across all jobs
- A list of employees approaching overtime each week
- Verified payroll savings
Our Time Clock App Gets You into the Game
With our time clock app, you 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.
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