There are many costs to consider when running a small business. From materials, advertising, payment processing, and inventory to payroll taxes, these costs can all add up. But one of the most important costs is to track labor costs.
Labor costs can make up as high as 50% of total costs for some businesses, and that’s why it’s important to have a system in place to keep an eye on the actual labor costs. Plus, these costs are rising. With new higher minimum wages and overtime rules, small businesses will face higher labor costs.
This article will give you 5 handy tips for tracking and lowering the cost of labor for your business.
5 tips for tracking labor costs in real-time (and lowering them too!)
If you find it difficult to track and control labor costs, we suggest you try to:
- Rotate your schedule over time to make sure your employees are all working equally.
- Get a free software that tracks your labor costs and your sales and warns you when costs rise.
- Use sales forecasts to figure out how many people should work in a week.
- Stop early clock-ins and other forms of time stealing.
- Automate your scheduling process.
Let’s dig a little bit deeper into each one:
1. Rotate your schedule over time to make sure your employees are all working equally.
While it may be tempting to have a set schedule for each week where the same employees are working the same days, this can lead to some employees working much longer than others.
The issue here is that if some employees work too often they can get overtime while some employees are working much less. Overtime is very expensive for your business, so consider implementing a rotating schedule and using a work hours calculator to make sure your work hours are being distributed equally.
2. Get a free software that tracks your labor costs and your sales and warns you when costs rise.
Cost tracking with a labor cost calculator can be a huge time suck. And on top of all, you have to do to run your business, you might not have the time to do it. That’s why it’s important to consider free employee scheduling and time tracking software like Homebase.
Homebase allows you to integrate your scheduling and time tracking with your point of sale system so you can monitor labor costs and sales. With Homebase, you can hire new employees, make your team’s schedule, track labor hours, and export your timesheets to payroll all in one place.
With such an all-in-one solution, it’s easy to stay on top of your labor costs and other key metrics and labor data. Plus, you’re notified when a schedule you make is too costly for you or if an employee is approaching overtime.
Homebase is an all-in-one scheduling, time tracking, and hiring software built for your business. And did we mention it’s completely free? Sign up today!
3. Use sales forecasts to figure out how many people should work in a week.
Nothing is worse for your bottom line than having too many people working when you’re not busy. That’s why sales forecasts are so important. Homebase uses past sales data to predict your sales for a given day. With that information, you can determine how many people should be working so that you’re appropriately staffed.
4. Stop early clock-ins and other forms of time stealing.
We’ve all heard of employees stealing time from their businesses. From getting a friend to clock in for them or taking a longer than approved break, there are so many ways that employees can cost you more money than you expected. That’s why it’s important to invest in a proper time-tracking solution.
With Homebase, employees cannot clock in early and our tablet time clock app takes a picture of employees when they clock in, making sure it’s really them. Plus we have mobile GPS tracking on our Essentials plan which is great for teams with employees in the field or with multiple locations. Employees can clock in using a mobile app on their phones, but they will have to be at the right location to be able to do so.
5. Automate your scheduling process
Sometimes business owners spend too much on labor costs because they can’t find a low-cost schedule that works. So they’ll pick a consistent schedule to save them time that ends up costing a lot of money. Automating the employee scheduling process can make all these problems disappear. And it can save you a bunch of money.
Using an online schedule maker saves the average owner 5 hours in scheduling every week. That money saved is more cash in your pocket.
We hope these five ways to track and lower labor costs are helpful. If you want to stop wasting time and money on scheduling and labor costs, consider using Homebase. Click here to get started.