Wages as a percentage of sales query

zenmonk

Just wondering what would peoples experiences of wages as a percentage of sales be in the retail sector.
At the moment I am running a business at around 16.5% but with some quiet months ahead this could rise to 20%. Is this acceptable or high/low.
Cheers

Bandara

It seems insanely high to me, but in saying that it depends what retail sector you are in.

In c-store sector my wage percentage is at 10.5%, in restaurant it is closer to 55%.

What type of retail is it? Does it require highly skilled staff involvement etc?

What margin does the business operate at?

zenmonk

Electrical goods/DIY sector, some trained and skilled staff (sales, accounts,) alot of unskilled. Quite labour intensive e.g we deliver 60% of our sales
Margin 24-26% gross.

Bandara

I'm stepping into an area I know very little about (electrical/diy etc) but it does sound high to me.

what % of profit do you hope to retain? i.e is there a huge turnover that requires a lot of staff to keep the show on the road?

Do you work in the business yourself? imo a owner who works the business is can replace two staff.

edit, well the delivery end of things will add a couple of percent.

Hypethical question: if a sales person and an office person rang in sick for the next month would you still be able to trade effectively? (even it means the pressure is put on the other staff)

If the answer is yes then your wages is too much. (ie too many staff)

Its a bit simplistic I know but usually not far off the mark.

Tigger

10% or less

zenmonk

Hammertime wrote: »

I'm stepping into an area I know very little about (electrical/diy etc) but it does sound high to me.

what % of profit do you hope to retain? i.e is there a huge turnover that requires a lot of staff to keep the show on the road?

Do you work in the business yourself? imo a owner who works the business is can replace two staff.

edit, well the delivery end of things will add a couple of percent.

Hypethical question: if a sales person and an office person rang in sick for the next month would you still be able to trade effectively? (even it means the pressure is put on the other staff)

If the answer is yes then your wages is too much. (ie too many staff)

Its a bit simplistic I know but usually not far off the mark.

Good questions,
retained % profit 6 -7.5% (industry average)
Overheads on wages reduced by 25% since 08 - so redundancies unfortunately already
I do work in the company myself
If we lost 1 or 2 staff we could cope any more and serious pressure i.e overtime , which I have cut out at the moment. However it is a bad time to cut staff because 1 - its christmas 2 - winter often arrives with sick days 3 - maybe in the medium term there will be a pick up and have invested time and training into a very good staff.
Staff at the moment is in the high 20s. Some on short time hours.
At the end of the day I am a realist and would do whatever it takes to keep going when the pressure hits.

zenmonk

Tigger wrote: »

10% or less

Wow!