Do You Need a Crystal Ball for Labor Forecasting?
Wouldn’t it be great if we could all put on that big funny hat and stare into a crystal ball to see the future of our business? Well, we all know that isn’t possible (with the exception of putting on the hat of course) and our business decisions need to be based on facts, not a lot of smoke and mirrors. The oecd.org website defines productivity as a ratio between the volume of output and the volume of inputs. In other words, productivity is the measurement of how efficiently production inputs like labor and capital are being utilized to produce a given level of output.
Controlling Labor Costs Starts with a Goal
Labor costs are an integral part of any business, and understanding how to calculate a viable formula for this critical expenditure can mean the difference between profit and loss. Set a cost percentage goal to determine a percentage for labor cost calculations. The number is usually around 26 percent of your total revenue. This figure can vary up or down but it’s a good jumping off point to getting a handle on labor expenditures.
Forecasting Sales Revenue
Just like labor cost management, we begin sales forecasting with a goal. These can be broken down for each day of the week. Revel’s intuitive Point of Sale System incorporates labor percentages based on the data you’ve entered and displays a color-coded report so you’ll always know just where you are in relationship to your goals. If the percentage turns green you’re at or below your goal; an orange display means you’re within 1 percent of your goal; red means the difference is more than 1 percent.
Meeting Goals and Managing the Labor Cost Center
While forecasting is a great way to create a business roadmap, you’ll need to stay on the course you’ve created to follow that map to success. Revel’s forecasting tools can check your sales totals from the previous week to assure you’re on the established path. This failsafe method of checks and balances lets you see if this week’s labor cost percentage is within the range you’ve established based on the previous week’s data. Since this key feature displays productivity, you’ll be able to determine your all-star employees from those who need to make improvements.
The Bigger Overall Picture
When you’re dealing with razor-thin margins in an unforgiving competitive marketplace you need the best tools at your disposal to achieve profitability. With Revel’s iPad Point of Sale, business owners and managers have a cutting edge product at their fingertips. The ability to project labor costs and sales percentages gives you total flexibility over employee scheduling to ensure you’ve never over or under staffed assuring efficiency in the workplace.