Financials: Know Your Revenue Per Employee? You Should!



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Revenue per employee is a key indicator of the financial health of your business.

Fan gush: We think Jim Zielinski, a Niche Magazine Conference contributor, is a cost cutting strategy expert. In the first post of this series, Jim told us about ways to measure your company.   He knows solid, practical ways to develop cost-reduction strategies for niche magazines. What to do first?  You need to evaluate a key revenue measurement for your magazine–revenue per employee.

“Revenue per employee is the most key basic measure because it fundamentally incorporates the entire P&L (Profit and Loss) in one number.  In media businesses, the staff payroll and related expenses probably account for perhaps 60% to 65% of total expenses,” Jim tells us.

If revenues per employee are too low then your staff expenses will quickly destroy your profitability. How low is too low?

  • Excellent operator:   $250,000 and over per employee
  • Good to Average operator:   $150-250,000  per employee
  • An operator who needs to “rethink the business model”:   Below $150,000

Note: If an operator is below $150,000 per employee, then basically this operator has too many employees for the volume of business the owner is booking: This cannot be a very profitable business.

So now that we know where we need to start and what we need to understand, we can learn to spot those areas of the business where efficiencies/savings can occur. Stay tuned for the next Cost Cutting post about the 7 key areas to find savings.  Questions or comments? Share them with us on Facebook or Twitter.

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19afd32About Jim: Jim gave us a presentation for the 2013 Niche Magazine Conference and we learned that attendees definitely wanted us to post more cost-cutting ideas for niche magazine publishers.
Now: Jim Zielinski is founder of Zielinski Financial Advisors, LLC, an independent financial consultancy. The firm’s focus is on acquisitions, bank financing, profit and performance improvement, and preparing your company for sale.
Past Life: Jim worked in banking and equity investing at Chase Manhattan Bank, N.A. and Bankers Trust Company for over 20 years.In 1997, Jim became CFO for Hanley Wood, LLC, a business to business media company, where he was an owner, director, and executive directing the financial affairs of the company until its sale in 2005. Jim is a member of the Board of Managers of Virgo Publishing, LLC, Athletic Business Publications, and MedTech Media.

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