FIRST QUARTER 2019 25 continued on page 26 continued from page 24 at risk. If you have a customer retention program, make sure it is being implemented properly. Expense Budget - All your costs need to have a detailed budget, backed by supporting rationale. These expenses would include: • Rent • Supplies • Utilities • Transportation • Marketing • Customer Service/Claims • Repair and Maintenance • Insurance • Labor Labor Budget - This significant expense demands special attention when determining your budget. Consider the following key performance indicators to determine a more accurate labor expense: • Efficiency Standards. This number is represented by the POH (pieces produced per operator hour). • Average Wage per Hour. • Revenue per Piece. An average number should be calculated for all pieces coming in. There should also be additional breakouts of just the drycleaning pieces and just the laundry pieces. • Overtime. • Bonus Payments. Your labor costs should include any benefit support costs such as medical benefit contribution, payroll taxes, vacation or sick days, and training programs. These costs could contribute up to 30% of direct labor costs. When creating a budget for labor, you need to include the following categories (if appropriate to your operation) and determine what those category costs are as a percentage of total sales: • Dryclean Labor (% of drycleaning sales paid toward drycleaning labor) • Laundry Labor (% of laundry sales paid toward laundry labor) • Alternation Labor (% of alteration sales paid toward alteration labor) • Counter Labor (% of total sales paid toward counter labor) • Route Labor (% of route sales paid toward route labor) • Household/Other Labor (% of the household and other item sales paid toward the labor) • All salaried and office personnel (% of total sales paid toward salaried and office personnel) FORMULAS Revenue per piece - How much money, on average, does each piece cleaned generate? To calculate the average revenue per piece, divide the total revenue by the number of pieces cleaned. It is important to use data from the same time period. This means, if you are using revenue figures collected over a full year, you must use the number of pieces cleaned over the same year for accurate calculations. Or, if you are using revenue figures for just one week, the number of pieces cleaned must be from the same week. This formula can be used to calculate information for the entire operation or for specific departments such as laundry or drycleaning. FE ATURE