Revenue Per Employee In Small Business
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Overview: The article tells about the simple ratio of Revenue Per Employee. Revenue Per Employee is a key ratio for start-up companies. A low Revenue Per Employee in comparison to similar companies is a bad sign, often boding possible failure. Companies usually fail for one of two basic reasons. Either, the companies fail at marketing their product or service and generating sales. Else, companies fail to keep the costs to produce and market their product sufficiently low. Some new companies have problems generating any sales at all. There is a lack of basic revenue. Failure to make sales shows up as low Revenue Per Employee, though, as the owner of the business, one will instinctively know when the sales are too low. But, if one is an outsider evaluating a business for investment, calculating Revenue Per Employee gives some measure of whether or not the business is generating adequate sales relative to its assets and people. Revenue Per Employee puts similar, but different-sized companies, measured by their revenue, on a more equal footing to compare their relative efficiency. The article points out that a viable company might have a low Revenue Per Employee if the company is a service company, providing a labor intensive service, but with low labor cost.
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Format: HTML | Date: Jan 2003 | Pages: 1
