5 Ways to Optimize Labor Costs in Your Business

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April 29, 2021

It's one of your biggest expenses, and it's always in flux. Nearly every business across the country has the same major concern: labor cost.

Successful business owners know that the money they make day in and day out, is ultimately invested back into their business, particularly through their workforce. Yet  achieving perfect labor costs is a combination of tools, skills and insights. There 5 tips will help you save more, and spend less.

1 - Optimize your scheduling process.

Making schedules sounds simple and straightforward, but with a large amount of staff it can take hours. Plus staff can be scheduled to work overtime hours, or on stat holidays when others could do the job instead who wouldn't get the increased rate.

Scheduling the old way can be frustrating and tiring for staff, consequently affecting guest experience, and can cost you money. Scheduling mistakes can also be costly; confusion and inconsistency with scheduling can often lead to under-staffing or over-staffing.

The solution? Considering scheduling software that has features schedule forecasting, templates and other easy to use tools that increase transparency, and ease of use. These tools allow you to compare the hours used previously, and labor and sales reports allow you to schedule accordingly.

2 - Streamline communication.

Smart scheduling software is a game changer when it comes to communication. This advanced technology allows staff and management to communicate on a single platform, this means schedule changes are made more consistent and easy. No more phone calls during rush hours, forgotten conversations, and lost or crumpled written requests!

Staff are also more likely to communicate with one another, and covering shifts will be easier accessible and more stress-free. Broadcasting messages to staff makes communication simple and schedules are easier to create, even with a constant flow of requests. Making work easy for you and your employees will also likely reduce your employee turnover rate!

3 - Use automated time clock software with facial recognition.

Time clock software is a game changer when it comes to optimizing labor costs. A Booster Juice franchise owner recently reported saving 6,000 hours on labor per year thanks to this technology. The automated technology works by adjusting late and early punch in's by staff, ensuring no unworked hours are paid. The facial recognition factor helps business owners eliminate staff from buddy punching, or remote punch ins. An additional benefit to time clock software is that it offers you a live metric to measure against sales numbers, making reporting easy.

4 - Cross train your staff to lower labor costs.

You’re purchasing labor when looking for people to fill your workforce. Give your staff more than a pay check, and teach them skills that they can use across different mediums. Cross training your staff will help improve their skill sets, and aid in employee retention.

A solid set of staff who know what they’re doing will allow you the flexibility when creating a schedule. There’s nothing quite like knowing that your business has a solid team behind its success.

5 - Know your numbers.

If you know your numbers, you’ll know your business. Depending on your workforce management provider, your reports can tell you anything from  labor cost vs your real time sales, to daily employee clock entries.

You have to understand the reports in order to receive an accurate pulse on your business. Like the world’s billionaire restaurateur has said “you cannot be successful in business if 1) you don’t know how to operate what you’re doing, 2) if you don’t understand the numbers of your business and all your costs…

"Understanding your reports and ultimately your business' behavior, will allow you to accurately forecast labor costs, schedule staff accordingly, and make better decisions to improve your business.

You cannot be successful in business if 1) you don’t know how to operate what you’re doing, 2) if you don’t understand the numbers of your business and all your costs.

The best way to gather metrics about your business when it comes to labor costs is to consider a workforce managment system that can integrate with your POS system. This will allow you to pull sales vs labor costs, giving you the insights and tools to save money and time.

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December 2020


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