Chris WiserSerial Entrepreneur and MSP Growth Catalyst

People are some of our biggest expenses...

Name: People are some of our biggest expenses...
Uploaded: 2024-03-15T17:13:07Z
Channel: Chris Wiser
Description: A short single-speaker YouTube monologue for IT service companies arguing that employees are a major expense and must be measured for ROI. The speaker…

15 Mar 2024

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A short single-speaker YouTube monologue for IT service companies arguing that employees are a major expense and must be measured for ROI. The speaker recommends tracking utilization and revenue-per-employee (citing $250,000 per employee as a baseline and suggesting incentives to raise that toward $400–$500k by sharing revenue with employees) and notes other important levers such as churn rate.

For IT service companies. We know that people are some of our biggest expenses. So what do we need to do here to ensure that our employees are profitable and we're generating an ROI from those employees? So rather than just kind of leaving it for leaving it to chance, we need to have things that track the utilization of our employees. So one employee per $250,000 a year is one of my favorite metrics just so that we can understand what's happening. And then how do we incentivize that one employee rather than going for 1 to 250,000, how do we get 400 to 500,000 out of them a year and incentivize them and giving them a portion of their revenue so that they can go further and make a lot more money? It's also understanding all of our levers. Okay, so we understand that revenue per employee is a very, very big one for IT service providers. We also need to understand things like what our churn rate is.