Carpet Cleaning and Service Business Tips
Overhead - There are many sources of business costs or overhead. These costs are generally broken up into two categories, fixed and variable costs. Fixed costs are costs that do not vary with an increase or decrease in sales. Examples are salaries, rent and property taxes. Your rent is the same whether you have 1 job or 100 so this cost is “fixed” at a predictable amount.
Variable costs are costs that vary from month to month depending on use or business activity. Examples are commissions, electricity, gas etc.
When starting or operating a business many owners prefer to scale costs with business activity. This means owners minimize fixed costs and try to make as many costs as possible variable with sales activity. Employee pay is a good example. If business is down you may not be able to pay employees the same as when business is doing well. Commissions and profit sharing are a great ways to pay employees as it scales to your level of business activity. When sales are brisk you can afford (and should) pay employees more and when sale are slow and profits are lean your payroll will fall keeping your costs low until business picks up.
For example, in a carpet cleaning business you might consider paying a commission to crews rather than basing pay on a 100% flat pay scale. This gives your crews an incentive to sell additional products and services creating additional revenue and profit.
Visit our Other Service Business Software Tips Pages
• The Benefits of Great Customer Satisfaction
• The Relationship Between Overhead and Profit
• The Importance of Employee Satisfaction
• The Advantages and Savings of Computer Automation
• Carpet Cleaning Software Case Study
• Maid Service Software Case Study