Do you know exactly what your life will look like tomorrow? How about next week? Next month? Predicting the future is impossible, but forecasting your future labor costs isn’t. If you’re in the service industry, your labor costs are likely one of your largest expenses, which also makes it one of the most important things to keep track of. By following a few simple guidelines, you’ll be well on your way to forecasting your labor costs accurately, and taking control of your business’s financial future.
It’s no secret that the quality of the people you hire pays off in the long run. Not only do you see lower turnover rates among employees who are more engaged and happy, you’ll also notice an increase in productivity. It is critical to treat your employees with respect, and to pay them a competitive wage. Another way to increase the quality of your employees is to cross-train them when they’re hired. They’ll be more flexible and able to perform well in situations that require them to fill a role that isn’t technically in their job description. Having employees who are agile and happy in their jobs creates a predictable flow allowing you to forecast your labor costs with far more accuracy than you could with employees who are disgruntled or under-trained.
A basic of running any kind of business is forecasting your future sales. Sales will vary depending on a myriad of factors. Maybe your restaurant sees a large number of customers during the summer time because you’re located in a beach or mountain town. Perhaps the economy is in a lull, and is predicted to see an upswing in the next few months. Maybe you’re planning on running a promotion that will attract new customers. Any and all of these things will impact your future sales, and it’s important to take them all into consideration when scheduling your employees. Using your point of sale system to run reports on how marketing initiatives perform and to see past trends will help you to predict upturns when more labor is needed. Once you have your sales forecasted, you will have a better idea of which of your employees you’ll need to work, during what shifts, and on what days of the week. Forecasting your sales is a critical factor to consider when looking at your future labor costs.
The final thing to keep in mind when forecasting your labor costs is scheduling your employees effectively. Get to know the strengths and weaknesses of each employee and schedule people who have experience with new employees so that training and fine tuning of skills is done on an ongoing basis without interrupting the level of service. Ask yourself if you need all of your employees to work the first and last shifts of the day, or could you have a few competent employees come in and take care of set-up and teardown? Your retail point of sale system should have reports that indicate what time of day things start to pick up and wind down.
Are you ready to learn how your POS system can help make your labor costs more transparent, then contact a SilverEdge representative for an appointment. We’ll help you maximize the capability of your POS system so you can focus on growing your business. We are ready to help make your business richer!