Staffing Mix of $2M+ Shops

[neil_se]

I'm curious to know the staffing mix of other shops with annual revenue of roughly $2 million and beyond. My business is a little shy of that at the moment with goals for continued growth. We manufacture and install most sign types in-house except for outsourcing fabricated channel letters, fabric printing and billboard prints.

Current staffing is:
1x Receptionist/office manager
3x Sales
1x Designer
1x Print operator/designer
4x Signwriters of varying experience who cover production, manufacture and installation
1x Accounts (part-time)
Myself as GM/sales/CNC operation/designer/HR

In the near future I think I'll look for someone more junior to train purely in production to free up my more experienced guys from that.

Anyone that would like to share their staffing mix and roles would be helpful for perspective.

 

[Alan Hubbard]

We ended last year almost at the 2M mark and had the following mix
Myself as GM/sales/CNC operation/designer/HR
2x Design
2x Spec/ Engineering
4x Print/ Vinyl Production
1x Apparel & Promotions
3x Production/ Fabrication
1x Installation
1 PT sales/ account manager (all of our work is referral or word of mouth)

We've added another FT CNC operator/ Production Manager, 2x in production and getting me out of the shop and into more sales.
We are shooting for 2.5M this year.

 

[kcollinsdesign]

Neil_se: It is impossible to fully answer your question without knowing how your business works. For a typical sign shop, you are really top-heavy with administrative jobs. Four "signwriters"? A sign writer typically stands at an easel hand painting with a brush, and does not need a designer to figure out what to do. Maybe what you mean is you have 4 employees handling all aspects of production, installation and maintenance. A typical sign shop production employee will net the shop between $75,000 - $125,000 annually in gross sales. Installation and maintenance employees typically are on the higher end, and in-shop production workers on the lower end.

Three sales people seems a bit extravagant. If you are paying them around 10% of sales (average, I recommend a sliding scale), then for all three to make a median income of around $40,000 a year, their combined efforts should be bringing in around $1.2 million (not including your efforts).

Hopefully, you are billing the client for design services. This is an area where a lot of shops lose money, resulting in not being able to let designers have the time to do good work or not being able to pay and retain good designers. I always advocate hiring the best designers you can find, pay them what they want, and bill for their time accordingly. Nothing promotes a shop more than quality design work, and it can lead into other streams of revenue.

Depending on your market, service and installation is in the highest demand. Develop a reputation for reliable service and installation and go out and develop some national accounts. Some markets are over-saturated with service companies (it is somewhat easier to do this than it is to design and fabricate original signs), but people will pay for this service because you have the equipment to do it, and employees willing to do this demanding job. If you are in a union state, looking into joining - it will open up doors with national accounts.

Basic breakdown of gross sales (note if you outsource a lot of production, COGS will go up and labor will go down):

Cost of goods sold: 30%
Labor (production): 40%
Overhead (including any non-billable workers): 20%
Profit (what you make): 10%

 

[neil_se]

We ended last year almost at the 2M mark and had the following mix
Myself as GM/sales/CNC operation/designer/HR
2x Design
2x Spec/ Engineering
4x Print/ Vinyl Production
1x Apparel & Promotions
3x Production/ Fabrication
1x Installation
1 PT sales/ account manager (all of our work is referral or word of mouth)

We've added another FT CNC operator/ Production Manager, 2x in production and getting me out of the shop and into more sales.
We are shooting for 2.5M this year.

Thanks Alan, that's helpful. My sales people do the spec on most jobs themselves unless it's complex, in which case I spec. Comparatively we have fewer people in the back end and it feels that way, always being under the pump getting jobs out on time and with me and one of the sales persons (who's an experienced signwriter) needing to get hands on regularly.

Neil_se: It is impossible to fully answer your question without knowing how your business works.

My question wasn't "what should I do", it was intentionally what's your mix. In Australia costs and wages (50-100k) are far higher for the same revenue and I appreciate different sign business types will affect staff mix. That's why I'm interested in hearing from a range of businesses. Signwriter is still a common term here despite the change in industry to digital.

I do feel we're heavy on the front end but we're also constantly getting more enquiries than 2 people can handle. A key focus this year is improving our sales and proposal process to make the most of all good opportunities, and weed out the bad.

 

[equippaint]

Your head count looks ok but seems heavy in sales staff for the revenue produced. We're not a full blown sign shop so I cant speak for the mix but hypothetically Id say keep or hire 1 GOOD sales person and replace the other 2 with 1 additional production person. Your signwriter / salesguy may be better as a shop manager with incentive based pay to help free you up to work more on your business rather than in it so much. Delegate HR to the office manager except for the hiring but they should set up all the interviews so it doesn't take up much of your time. Make sure you manage your reps too.

 

[Texas_Signmaker]

Your head count looks ok but seems heavy in sales staff for the revenue produced. We're not a full blown sign shop so I cant speak for the mix but hypothetically Id say keep or hire 1 GOOD sales person and replace the other 2 with 1 additional production person. Your signwriter / salesguy may be better as a shop manager with incentive based pay to help free you up to work more on your business rather than in it so much. Delegate HR to the office manager except for the hiring but they should set up all the interviews so it doesn't take up much of your time. Make sure you manage your reps too.

I second that ...being heavy on the sales end. Sometimes I do subcontract installation work for a $5 mil. sign company here locally, and I believe they have one sales rep that goes to the customer's locations, and one inside sales rep, along with a receptionist, one designer and about 10 in production / installation.

 

[Bly]

Interested in this too being in Oz and working towards growth.
Salaries here are high so adding staff is a big move.

 

[kcollinsdesign]

Your labor and material costs are much higher than here in the States, but at least minimum wage workers can make a living. My wife and I pay $1200/month for health insurance premiums, usually max out our deductibles (another $4k) and pay several hundred dollars a month for co-pays and pharmaceuticals. We are both healthy and in shape, I have type II diabetes (which I control with eating properly and exercise) but still requires monitoring and a prescription for metformin, my wife has stage 1 hypertension which also calls for monitoring in order to obtain a prescription for lisinopril. Our total medical outlay is over $20,000 annually, and if we get injured or sick it would be more.

Half the U.S. can't afford that, and either sustain poor health, present at hospital emergency departments for what should be routine clinical treatment, endure suffering, or die prematurely. Meanwhile the richest 10% of Americans have 90% of the countries wealth. One third of our population live in or one paycheck away from poverty.

I mention this because the financial conditions in Australia are dramatically different than those here. Entrepreneurship is encouraged, and if a person is willing and able to work they are not suffered the indignity of a $7.25 hour minimum wage and no health insurance or means to pay for health care. If you want to come to the U.S. and leverage your privilege, get in line, but the competition to the bottom is intense.

I have been fortunate because I was blessed with an ability in art. I can leverage that to my advantage and provide a unique service that is always in demand. Others may not be so fortunate, and have to rely on hard work and shrewd business acumen (or the ability to raise significant capital). Most of the successful shops in my area were either inherited or financed by family money. The union affiliated shops pay a fair wage, but everyone else pays $12 - $17 an hour with no benefits. While I sympathize with you because your costs of doing business are high, I envy you and your country in that you challenge the tenets of unbridled capitalism and respect the dignity of your fellow citizens. I suspect you can make a fair profit with hard work, but if you want to really make some money come here where it is considered fair play to screw your workers and make obscene profits.

 

[kcollinsdesign]

To answer your question, at the last shop I worked at doing $2 million plus, we had 2 owners (father and son-in-law), 2 office workers (wife and salaried office manager), 1 sales person/designer (me), son-in law also did sales, 2 full time CAD/CAM/production workers, 2 full time shop production workers, 1 mechanic, and 7 installer/maintenance employees. Son-in-law did mostly national accounts and big projects, I handled all design and engineering and most local accounts. The other owner hired and fired, worked with the accountants, bank, and lawyers, walked around the shop saying "atta-boy" and settled squabbles (he also provided start up and emergency capital).

Sales did their own estimating, permitting, purchasing (purchase reqs), and invoicing. The office manager reconciled Quickbooks, paid bills, and prepared payroll. The owner's wife typed up letters for the owner, helped with filing, and accompanied the owner on PR missions and community outreach.

 

[jasonx]

25% of our labour resources are on the front end. 75% are in production. We're not a traditional sign shop but a trade only wide format partner.

What problems are you facing in your business model?
Are you over 10% profit?
Is the front end work and production work getting done (your response above suggests not 100% at the moment)?

From discussions I've had with owners in the states their business models in terms of labour is different to us in Australia. They also vary state to state over there. So its hard to compare a US business model to your Australian operation.

What is your current split in % for cogs, labour, overhead and profit?

Feel free to PM I love working with business models and have helped some of our trade customers correct their business models by understanding their model and ensuring pricing follows their business model.

 

[ColorCrest]

I'm curious to know the staffing mix of other shops with annual revenue of roughly $2 million and beyond.

Although your shop machine positions will carry different titles, here’s some food for thought if you might be a sign graphics shop of $2M+ in a major metro area…

President
Gen Mgr
Salesperson 1
Salesperson 2
Sales Assistant / Proj Mgr / CSR 1
Sales Assistant / Proj Mgr / CSR 2
Receptionist
Bookkeeper
Production Mgr
Graphic Designer
PrePress 1
PrePress 2
Press Op 1
Press Op 2
Finisher 1
Finisher 2
Installer 1
Installer 2
Shipping / Receiving / Purchasing

You might notice all of these positions may be covered by another person when one is out, even for an extended time such as maternity leave, broken leg via failed BMX stunts, etc.

When you reach close to $3M consider committed attention for I.T., social media, web-wrangling, etc., and more operators for more machines.

Lots of shops have significantly more or less staff but close to the same revenue of $2M. As always, “mileage varies.”

 

[ColorCrest]

Cost of goods sold: 30%
Labor (production): 40%
Overhead (including any non-billable workers): 20%
Profit (what you make): 10%

Although ratios of 25%, 25%, 25%, 25%, has been a general guidepost for small manufacturing, the numbers posted by kcollinsdesign I find to be common nowadays.

I've posted this "general perspective" before...

 

[StarSign]

2x Receptionist
2x Sales
5x Designer
1x Print operator
6x Signwriters of varying experience who cover production, manufacture and installation
1x Accounts

This does not include management

 

[equippaint]

Although your shop machine positions will carry different titles, here’s some food for thought if you might be a sign graphics shop of $2M+ in a major metro area…

President
Gen Mgr
Salesperson 1
Salesperson 2
Sales Assistant / Proj Mgr / CSR 1
Sales Assistant / Proj Mgr / CSR 2
Receptionist
Bookkeeper
Production Mgr
Graphic Designer
PrePress 1
PrePress 2
Press Op 1
Press Op 2
Finisher 1
Finisher 2
Installer 1
Installer 2
Shipping / Receiving / Purchasing

You might notice all of these positions may be covered by another person when one is out, even for an extended time such as maternity leave, broken leg via failed BMX stunts, etc.

When you reach close to $3M consider committed attention for I.T., social media, web-wrangling, etc., and more operators for more machines.

Lots of shops have significantly more or less staff but close to the same revenue of $2M. As always, “mileage varies.”

19 heads for only $2mil revenue?
Salaries alone would be $700k+ then taxes and comp.

 

[ColorCrest]

19 heads for only $2mil revenue?
Salaries alone would be $700k+ then taxes and comp.

Is that not 40% of $2M from kcollinsdesign example? (roughly)

 

[neil_se]

Thanks for everyone's feedback. My expenses averaged over 6 months came to

COGS 28%
Total Labour 50% (20% customer service, 30% design/print/production/installation)
Other operating expenses 12% (biggest contributor rent @ 5%)
EBITDA 10% (but NPBT only 5% which is a concern)

There were some additional labour expenses that drove this higher than usual (a long-service leave payout and training for a second receptionist so the office manager could go on maternity leave). Typically it's 45%. This includes the compulsary 9.5% superannuation contribution (401k equivalent).

Average wage (with mine excluded) is over 65k. One problem is we don't have any juniors or cheap labour to do the simple tasks, hence why I'll be looking for a production person next.

We give a very high level of service and responsiveness, butI know we're not sufficiently recooping for the time that salespeople spend with customers. One sales person (who's only fairly new to that role) is moving away in the next few months, so the feedback illustrates to me that we need more support in production and to streamline sales to utilise the 2 remaining sales people + myself.

 

[HulkSmash]

We're Heavily into wraps, and here's how our setup looks.

2 Account Reps
1 Office Manager
1 Operations Manager
1 Designer
2 Production
6 Installers.

 

[jasonx]

You're in a good position. Cogs at 28%. Meaning your pricing has room to increase profit with increased efficiency internally.

What you need now, is to grow your revenue with your existing labour costs or reorganise your labour costs.

That will leverage your fixed expenses like rent and bring that down as a % and increase your profit. 5% profit is a concern but depends what you're taking out of the business.

 

[equippaint]

Is your ebitda figured with your salary back in it? 10% isnt leaving much room for anything unless this is after you get a big lump yourself. Id take a good hard look at your non revenue producing guys (admin and sales). Maneuver to try and get 20% with what you have rather than focus on increasing gross revenue.
This is just my opinion, maybe other industry guys can chime in.

 

[neil_se]

Yes those figures include my salary. I pay myself a good salary and benefits but still looking to achieve a better return for the investment and risk.

I think with current total staffing numbers ( less 1 in sales and +1 in production), current equipment, vehicles, premises, etc we could be doing 15% more revenue, of which 70% will be profit. That really gets us past the tipping point and into good profit territory.