Ratio of cost of staff wages to turnover?

[cornerstones]

I'm wondering if anyone has a rough idea what is a workable figure of the ratio of the staff wages to the sales turnover figure - it's an online furniture company

 

[Billmccallum]

There would be no set ratio as all businesses have differing needs, for example a contract cleaning company will have a much higher staff/turnover ratio than a basic ecommerce web store, the web store could be operated with just one person whereas the cleaners would be labour intensive.

What would you need the figure for? The most important figures you need are profit margins and ROI.

 

[cornerstones]

The reason I'm asking is that it's been suggested that our wage bill is a bit steep for the turnover. The wages are around 8% to 10% monthly

 

[Paul Norman]

There are many other variables to take into account.

The key issues is this. Are you profitable at a level that is acceptable to you?

 

[Billmccallum]

But how does the wage bill impact your bottom line?

What would you have to do to reduce the wage bill? loose staff? lower wages?

Do your staff contribute to the success of your business?

I know businesses where the wage bill is 60% - 75% of turnover, but its not a measure of profitability.

 

[antropy]

The key issues is this. Are you profitable at a level that is acceptable to you?

Spot on really.

All I'd add is that perhaps someone has identified because they think this could safely be reduced without impacting sales and therefore increasing profit. But you'd have to be sure it wouldn't have a negative impact on profit or limit your future growth potential. It may be that you're slightly overstaffed now but that you'll need everyone as you get busier.