Know Your Numbers

Most drycleaning owners don’t know their numbers. When I get on an introductory call and I ask the business owner what their Earnings before interest, taxes, depreciation, and amortization (EBITDA) was last year, or what their production payroll percentage is year-to-date (YTD), or their revenue per employee YTD - eight times out of 10 have NO IDEA.
 
The real scoreboard is “money in the bank” so many owners default to using their bank account as their measuring stick. The problem with this is you don’t know the numbers that are producing the score. It would be like not knowing the stats of the players or how many yards are made passing or rushing in a football game. You know the score, but not how you got there.
 
A summary number is not good enough, so most people don’t measure, and they don’t track the key numbers that add up to the results in the checking account. But measurement ALWAYS improves performance. The best decisions are made when they are based on data.
 
There are three types of numbers – historical (happened in the past), real time (they are happening now), and predictive (will likely happen in the future). I know a lot of drycleaning owners who get frustrated because they are looking at numbers that are so old they are growing mold. These historical numbers usually have no practical value in changing current and future results. 
 
Here are some metrics drycleaners should track in real time and also use to forecast predictively:

• Net revenue
• Revenue per team member
• Leads, cost per lead (by source)
• New clients, cost per new client (by source)
• Pieces processed by type
• EBITDA
• EBITDA per team member
• Production payroll percentage
• Retail payroll percentage
• Total payroll percentage

 
There are others but this is a good start of the primary drivers of your profitability. Start measuring and you will see your profit and checking account improve.
 
Have a great week!
Dave