Business owners often seek extraordinary solutions to corporate growth problems; however, after making significant investments, the net results often are incremental improvements at best. There are simple corrective actions that substantially can increase business revenues, profits and corporate value.
The inverted pyramid
An ideal organizational structure reflects a pyramid with a large base of junior employees topped by significantly fewer senior leaders. The logic is that if you follow a standard pricing model, profit margins are much higher for junior employees than margins associated with senior employees. You can reach this conclusion by following what I refer to as "the rule of three," which considers direct costs (such as an employee's salary), overhead and profit.
For example, assume you pay a junior-level employee $17.50 per hour. Multiply that number by three to determine the amount you should charge a customer per hour for that employee's work. In this case, the amount would be $52.50 per hour.
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