Another example of financial acumen in action.

Wages as % of Sales.

For most small businesses, wages is one of your biggest expenses.
If you have a constant workforce, working regular hours, your wages bill will be pretty much the same each month.

But if your workforce is not that constant and you have casuals working flexible hours, your wages bill will change each month.

One of the best ways to stay on top of your wages is to track Wages as a Percentage of Sales, each month.

Get your Wages figure for the month and divide it by the Sales revenue for that month.

For instance, if Wages were $28,750 and your sales were $93,450, your Wages were 31% ($28,750/$93,450).

Now compare this to last 2 months, e.g. December, January.

Now compare this to the full year to date so far (eg. Jul – Feb).

By breaking wages down to percentages, it allows you to compare month against month, in percentage terms, even though the actual dollar figure will change.

This allows you to make meaningful comparisons.

And ask relevant questions.

Then seek meaningful answers.

Has the wages % changed?

If it’s gone up, it means sales have not increased at the same rate.

What’s this telling us?

Can we fix this?

How?

Take the time to work on this one, it's a key indicator.