It’s difficult to decide how much to pay the people on your team.
While there are minimum wage requirements, most of the decision is up to you. The idea is to find a sweet spot where you aren’t paying your team too little or too much.
Too Little
You want to pay well so that you can attract quality workers. A warehouse manager told me, “We can’t drug test. If we did, we would have no employees. The factories who pay more can drug test, but we can’t.” Because of their minimum wage pay, they couldn’t attract quality workers—they were getting the people fired from the larger factories for drug use.
You also want your team to be loyal to you. You can give them a great environment and a fulfilling job, but if the pay is rock-bottom, they’ll always have an eye out for something else. It’s not personal, but people have to put food on the table. Most will take a worse job for better pay. Pay well so that you have a loyal team.
Too Much
You can’t pay too much, or you will sink your business. You only have a finite amount of money coming in, and you need to manage it wisely. That includes paying your team.
It is incredibly important to hire help in order to scale your business, but you have to be smart about it. Knowing your detailed Profit and Loss over time can help you make good decisions about when to hire, and how much you can pay them.
Do you need help getting your Profit and Loss straightened out?