When I was 21 and running my College Pro Painters franchise, I knew I wanted to make $12,000 profit that first summer (this was good money in the 80s – today’s College Pro franchisees can make $50K in one summer). To do that I actually reverse engineered my entire summer’s production to give me the profit I wanted.
Aside from the amount of jobs I needed to land and number of painters I needed to hire, knowing my exact gross margin per labor hour was absolutely vital to achieve my goals.
Measuring productivity per hour is often overlooked in many companies. People think bigger projects or consulting services can’t operate like that. I disagree. Tracking revenues produced per hour can be a great financial guide for your entire company. It allows you to find ways to be more productive and efficient, and constantly look for areas of improvement. This has been one of my grounds or basis in coaching or mentoring CEO’s in running their businesses.