Understanding wages.
It’s important to know how much you are actually paying per person. Ideally, you should never pay more than 45% in labour costs and 55% to the business, and ideally 33% to labour and $67% to the business. Somewhere in between those two figures usually lays a reasonably successful business.
Many people will know how much they charge for a groom most often, and roughly how long it will take for a groom, and what they pay their employee (or themselves) per hour, but those figures are seldom correct.
Let’s say the most common price you charge is $70, and you know your staff can do it in 90 minutes, and you pay $20 per hour, that sounds like a good enough deal.
The reality though, is that some grooms are less than $70 and staff will spend
more time outside of that 90 minutes cleaning up and answer phones. The $20 per
hour you are paying does not include holiday pay, sick pay, stats, Super funds
and other staff costs that you pay on top of that figure. The $70 also usually includes GST whereas you
cannot claim GST back by paying staff, so for a quick calculation, add GST plus
20% onto your base hourly rate to get a truer indicator of how much you are
actually paying for labour.
There are only a few ways to make the percentages better…
(a) Raise the groom price
(b) Speed up the groomer
(c) Lower the wages
If you show this to your groomers, I am sure they will quickly decide that
option (c) is out of the question, so that only leaves (a) and (b) to fix your
money woes.
The reason I do not add product sales into the pricing, is that the service industry should be able to stand on its own two feet. You should not be relying upon someone needing a bag of food or a new collar to pay the wages of your staff (or yourself). So it is easier to leave that out and make a profitable business even more profitable by adding that on top later.
These base figures will either make you smile or make you squirm, so at this point, I am going to leave you to work on increasing your groom prices if appropriate, or speeding up your grooms if that is where the problem lies.
You might try re-running the figures based on an extra dog a day, or an extra few dollars per groom, and see if it helps solve your problems.
In the next section of the premium version of the business calculator we will address other costs of the groom with rent, power, etc, so we can get an exact cost per dog, and also work out which is more beneficial to your own circumstances… full grooms, mini grooms, wash and dries etc.
If you wish to be able to track your progress and get a more thorough analysis of your business, you can gain access to the premium calculator by clicking here.
