Another way to measure your business growth (More here) might be to look at RPE.
Revenue per employee.
That’s a really interesting number to look at, because when you look at revenue per employee what it shows you is how good your assets are and how good your team is and your systems in your business at squeezing and sweating the assets.
Getting maximum value out of the assets that you have in your business.
If you have a fixed number of assets and you have a revenue of £300,000 per year, and we’re achieving that on 10 staff. So now we can do a very simple calculation;
Revenue divided by members of staff
£300,000 divided by 10
So we’ve got an RPE of £30,000.
Now we could grow this business by increasing the number of staff and in theory when we have 11 staff, the revenue goes up to £330,000, if we have 12 staff that goes up to £360,000 and so on and so forth.
What we really want to focus on here is not necessarily growing the £300,000, the revenue, so we’re growing this £30,000 your RPE. But what we need to be doing is thinking –
How do we sweat the assets?
How do we make sure we’re getting the most out of our assets as possible?
How do we get the most out of our intellectual property?
So rather than focusing on growing this number (revenue) or alongside focusing on growing your revenue, we might actually choose to look at RPE and say well how do we sweat our assets so that we can get more revenue per employee out of our team. Because if we can increase the RPE then your revenue is going to go up automatically and we haven’t actually had to take on any more staff.
RPE is great to use in conjunction with RPM (Revenue Potential per Month – Read more here). By the way because the RPM tool is gonna tell you when you need to take on more staff because it’s going to show you what revenue you should be doing per month on your current staff base.
Then if you’ve got targets which you should have if you want to grow you can play with the number of staff to see what number of staff you need in order to generate that amount of revenue at that level. So it’s a really really really powerful tool.
Interested in knowing more about business growth – check back on 13th Feb