Is the Daily Juice worth the squeeze?
Business can be distilled down to two primary ingredients - people and maths. Don't neglect the maths, the graveyard of failed businesses if filled with people that neglected the maths.
The growth of your business is afforded by the success of your business, not by the number of motivation reels you watched this morning.
It's wise to have a baseline net profit margin established, a line that is protected and held at all cost. If a decision or opportunity puts you in a position where the line is compromised or at risk, then the timing simply isn’t right and other moves would be required to ensure that the baseline is maintained.
Let's look at this through a simple staff sizing equation.
As a baseline I might need to make $100 of profit per day per employee to offset all the risk associated with running a business. As I grow and develop the team in the field I find that the daily profit average is sitting around the $150 mark. I now have 3 in the team, all making $150 profit per day. This affords the business the ability to bring on a non-billable resource. With the additional overhead cost associated with the admin person, that would then drop the profit per back into that 100-110 mark. Ensuring that the baseline profit target per person is protected. If this move was made too early or before the business success had actually afforded it, it would place extreme pressure on the profitability of the business. Now this is a very simplified small scale example, but this can be extrapolated out to any sized organisation.
To quickly assess your profit per resource, simply take your monthly profit figure, divide that by your team size and then divide that by the work days in the month. Then ask yourself, is that worth it for the risk that I carry as the business owner?
Daily Profit Per Resource = ((Monthly Profit / Number of Staff) / Work Days)
Is the juice worth the squeeze? Building a team while observing proven staffing ratios is imperative to ensuring you don't find yourself sitting on a house of cards waiting for the market shift to bring it all crashing down.
