Professional Documents
Culture Documents
The
owner
believed
in
maintaining
a
9:00am
to
4:00pm
work
schedule
and
giving
all
employees
a
12%
raise
each
year
in
order
to
maintain
employee
retenCon
and
morale.
When
the
client
came
to
Wharton
SBDC,
the
client
stated
that,
“I
have
begun
to
recognize
that
the
way
I
am
behaving
is
going
to
ruin
the
business,
which
would
ruin
me,
as
the
business
is
my
career
and
livelihood.”
“I
take
care
of
everyone
else’s
needs
first
–
my
clients’
as
well
as
my
employees’
‐‐
and
those
needs
are
insaBable,
so
I
rarely
get
around
to
what
is
good
for
the
business.”
For
the
client,
it
was
important
to
figure
out
a
way
to
increase
profitability
in
order
to
keep
the
company
in
operaCon.
AMer
iniCally
looking
at
the
client’s
financials
it
was
clear
that
revenue
was
relaCvely
flat
year
over
year
and
that
profitability
was
quickly
declining.
The
client
came
to
the
Wharton
SBDC
with
a
desire
to
increase
profits
not
only
just
because
they
were
concerned
about
the
ability
to
meet
payroll
moving
forward
but
also
in
hopes
of
reaching
a
point
where
they
could
sell
the
company
in
a
few
years.
The
consultants
discovered
the
source
of
the
client’s
rapidly
declining
profits
was
due
to
the
company’s
spiraling
expenses.
With
revenue
remaining
stagnant
and
expenses
nearly
quadrupling
year
over
year,
it
was
evident
that
the
client’s
increasingly
climbing
costs
were
eaCng
away
at
profitability.
• Changes in
Expenses
• 2004: ↓$43K
• 2005: ↑$21K
• 2006*: ↑$79K
The
consultants
realized
the
issue
they
had
to
tackle
was
an
issue
of
profitability
and
there
were
two
ways
they
could
tackle
the
problem.
Profitability
Problem
Payroll as %
Revenue Payroll of Rev. Paid Employees Average Salary