Now more than ever forecasting wage increases for your pet business has become a reality. The post-pandemic world is changing strategies for hiring including entry level salary rangers. In some areas minimum wage is being dictated by state policies and in other areas minimum wage increases are necessary to attract a good employee (and some places both of these things are happening).
How do you plan to step up your wages over the next few years to keep up with these increases?
How do you plan for the future success (and profitability) of your business despite increasing labor costs?
Knowing your numbers and forecasting your wages for the next three years is our recommended solution for both important questions. We recommend using excel as a tool to make forecasting easier and to try different scenarios.
Our tips to forecasting wages are to take these steps:
- Divide team members into Fixed versus Variable staff members
- Fixed are the staff you pay regardless of how many pets are served
- Variable are the staff that provide services and will vary with volumes served
- List current staff and their wages and calculate their current monthly pay
- Decide how big of an increase each staff member will get in current year and month of planned increase
- Calculate annual labor costs for current year by adding number of months at current wage and number of months at increased wages
- Determine the overall increase in wages for the current year – this is the amount you will need to increase your revenues to pay for the wage increases
- Plan wage increases using the steps above for the next two years
Our video provides more details on setting up your excel worksheet and ideas on how to increase pricing to ensure your business passes on increased costs to clients. We also share how you can use the staff forecasting data in our Pet Profits template to confirm your service rates cover your increased labor costs. If you don’t pass along these costs you’ll reduce your own pay to cover them. Pet services is not alone in facing increased labor costs so take action now to create your plan to recruit and retain the staff you need to provide excellent care quality.
Forecasting Wage Increases for Your Pet Business
Now more than ever forecasting wage increases for your pet business has become a reality. The post-pandemic world is changing strategies for hiring including entry level salary rangers. In some areas minimum wage is being dictated by state policies and in other areas minimum wage increases are necessary to attract a good employee (and some places both of these things are happening).
How do you plan for these increases?
The Dog Gurus helps pet care businesses launch, grow, and profit!
For more information visit https://www.thedoggurus.com/
Transcript
so again my name is robin bennett and
susan briggs is on my
whatever side you guys are looking at we
work with picture businesses around the
world to help them
launch grow in profit today's topic is
strategies for dealing in the postcovid
world
with staffing issues which we've been
talking about a few times but today we
want to specifically talk about
forecasting wage increases so we know
that
at least here in the united states the
reality is that
we are facing the truth of the matter
that we probably need to increase our
wages to get
quality employees to match what's going
on in society and a lot of
other larger companies have already
increased their wages
but we also have in the united states
throughout several states
and uh potentially it's going to go
federal we have
increases where that are being mandated
up to a 15
an hour minimum wage whatever it is
right now 7 45 or whatever
so we know that our industry is looking
at how can you do it quickly how can you
do it immediately how can you
not maybe not jump from minimum wage to
15 but if you're gonna
have to do that over multiple years how
do you forecast that
how do you plan all of that and still
make sure that you're profitable so
that's what we're going to talk about
today
if you have specific questions on this
topic definitely leave a comment and we
will try to answer as many
as we can but i'm going to just let
susan kick this whole thing off
just throw it to me there you go i
didn't even give you a topping it's just
like yours
it's wide open just go
there's a couple key things you said
there in the intro that i'm going to
play off of first
because we know sometimes jumping right
into the numbers part
is not the most fun but we will get
there i promise because this is really
important
if i haven't gotten you to do budgeting
and some of the other things i think
getting the numbers for wage increases
is important
and i do agree that because
other big companies have already started
raising wage ranges
to be competitive and find and hire and
build
quality teams you are going to have to
increase your wage range and we've
talked about that on other facebook
lives
the key thing you said robin is how do
you stay profitable in doing that
and what you're gonna have to do is
increase your rates it
there's really no way around it even if
you've already increased rates
you may have to increase some of them
again
and this is not unusual this is
happening in
every industry and so this is not
something that you as a business owner
should plan for your business to absorb
or for you to reduce your pay
in order to pay staff more your clients
will understand
and they will adjust their budgets
because they're having to adjust their
budgets
for other things as well so i think
maybe let's talk about that a little bit
before we get into
the nuts and bolts and how to actually
do forecasting
yeah and mark actually said the market
will eventually determine wages cost of
almost all goods and services are
increasing rapidly which feeds inflation
yeah absolutely and i think part in our
industry we
tend to be the nicest people um we tend
to
want to just help every dog that we run
into and the problem with that
is that we also then tend to feel this
huge
burden when we want to raise our prices
like oh but what if they can't afford it
and
they won't be able to bring their dog
and all of that and that's i love that
our industry is like that but the
reality is
everything is going up right now it is
not going to be a complete shock
if your prices go up as well and we
you there when susan said the only way
to
increase your wages is to also increase
your prices i would totally agree with
that but i know
for some of you you're going to just say
i can't do that but
the reality is if you don't do it it
means you're not taking home a paycheck
if you're the business owner and so
that's what we don't want to see
we the businesses that we want to see
succeed
are the ones that are pac certified the
ones that get education like this the
ones that are constantly trying to learn
like you guys are taking the best care
of the dogs so you're the business
owners that we really want to see
succeed
but you're not going to succeed if
you're getting burned out you're not
paying yourself
a decent wage yourself as the owner of
the company
because i know we've worked with enough
people to know you will pay all your
staff
and you will take a pay cut before you
take your staff's cut
but we don't want anyone to take a pay
cut but that means you do have to figure
out
there's only the only ways you can do
that is cutting expenses
or increasing uh your prices of your
services
so you're gonna you definitely need to
wrap your head around that and make sure
that
as you start planning and forecasting
these wage increases
you're doing something to your services
to increase those rates and it might not
be the all-around it might be certain
services
we've talked before about making a habit
of
increasing at least one of your services
every year you might
keep some of them the same and increase
others by a lot you might
increase a lot of them just a little bit
you might add a totally new revenue
stream like a membership
or a trick of the month and then get
revenue from that and your other
services don't change there's a lot of
ways you can do it
but the reality is you have to make more
money in order to stay
profitable while you're also increasing
your wages
of your team so that's just rolling on
starter and
if you have if you have questions about
that how do you figure out the right
pricing and that kind of thing we have
done several
facebook lives they should all be on
youtube we have a whole um
playlist on youtube on finances so just
go
and grab a glass of wine and watch
a big one
yeah and those are all free so
definitely if you're you're still
wondering how do i do that
just go and look at some of those
because what we want to specifically
talk about today is really how do you
forecast those wage increases but
making sure that you understand how to
price yourself is definitely
a big key to all of this yeah and one
way you can
increase profits
if you don't want to raise rates is you
can reduce discounts that also works
and we've talked about that so now that
we've got
that stage set we can talk about
how to do forecasting on your staff
wages
and i'm going to talk about it how you
would take that information
once you have the numbers to put into
our pet profits tool because that's the
one that if you watch some of our
facebook lives it's a very inexpensive
tool we have in our store
and typically with pet profits we ask
you to look at historically what your
wages and costs have been
but in this environment i would be
looking at
a forecasted amount for wages and then
put that in and see what do i need to
charge to be able to
cover this forecasted total that you
come up with
so i so we're going to talk about how
would you do that and so the first thing
i would do is i would use excel
because as robin knows i like to have
things in the spreadsheet and let the
spreadsheet do the math for me
but if you don't like excel you could
make a list and then have a bookkeeper
or even someone on upwork put it into
excel for you
but i would start by because in pet
profits we look at our
staff costs based on whether they're
part of your fixed
cost which means you're paying those
wages
regardless of how many pets come in the
door so like supervisors managers
front desk maybe even cleaning and
maintenance
staff support those people would be
considered fixed costs so i would do
them
in one group and i would divide based on
whether i'm paying them by
salary or hourly and so
i would do i would have two separate
lists and fix
my salary people and my hourly people
and then i would make a list of my
variable cost
and wages so those are the people who
are actually delivering services so like
your
lodging counselors daycare counselors
enrichment counselors trainers groomers
room techs all that and again i would
if i'm going to use pet profits because
we want you to look at profitability by
service
i would be doing them list my staff out
by department so i put my daycare
counselors together
my group counselors groom techs and all
that so i'll just
real quick to say and i'm typing notes
as you're doing that susan because i
know that sometimes
it helps to read it too but for those
variable costs when we're talking about
the staff that are delivering services
that is assuming
that you are not overstaffed so in other
words
this is one of the reasons we recommend
reservation systems this is one of the
reasons that we recommend
a membership like what we normally
recommend for daycare 2.0 where you're
doing an enrichment model
where you have a set amount of money
coming in
for the staff that you're going to staff
with
so this can be tricky if you end up with
a whole bunch of staff and then you
don't have dogs that day
that's what you want to avoid because
now they are still part of your variable
cost
but it's wasted payroll expenses
obviously
so the really savvy business owner is
going to monitor
their scheduling and match that with the
dogs and i know if you're brand new
that's a learning curve to figure out
how many dogs you need how much staff
you need and
initially when you're first open you are
maybe going to have days where
you have too many people but hopefully
you'll pick up your marketing
to cover recover from that because you
don't want to go for weeks and weeks and
weeks
with that and i know it's also hard to
tell people to go home when they've come
in
and obviously the staff wants their pay
and they don't want to have to waste
their time so
there are some systems that you need to
put in place just to make sure that
you're keeping your payroll as low as
you can
in general so i just wanted to throw
that out
jj agrees with you brother all right so
once you have your
list what i would do would be calculate
how much you i would be putting in what
do i pay
each person now on i would look at it on
a monthly basis so that i could look at
like the annual cost of my labor and so
i would think about okay if i'm sitting
here today
and this is what everybody's making when
would i
feel like i should give them an increase
to get towards wherever their starting
point is
towards that 15 an hour if that's your
target we know that a lot of people
say i can't bring in new people at 15
and not raise other people and that's
where
doing this as a forecast allows you to
plan this out
so that you can even if you're short
staffed now you could you may not know
who
the employee is but you may say i need
new staff number one
and daycare and i need another bay there
you could put placeholders in there
and figure out how many months of salary
am i going to have for them this year
so i would you know start put what
everybody's making now
and then decide okay i'm sitting here in
july
what month am i going to give them an
increase and how much
and then calculate how many months are
they going to be at this wage versus how
many months at the
new wage and then that would get you
in the end you'll have 12 months worth
of
payroll that you'll say okay this is
what staff's gonna cost me for
2021 and then i would
do another set of calculations say for
2022 this is what they're going to cost
me
and see how much more in revenue you
need to make to cover that increase in
cost
and then i think the beauty of doing
this in a spreadsheet is that you can
list those people you can list
their current amount and then you can
list the
projected amount and whatever date you
want to start that but then if it
turns out to be too much and you're like
there's no way i can pay that
you can start tweaking that to say okay
maybe i don't start this person
for two more months maybe i wait two
extra months before the
this group of people starts or maybe you
don't start certain people who already
have a higher salary until later
whatever it is but you can play around
with those numbers to start to see
what is the impact but i think you'll
also see the reality of okay now
here's the difference i need to make up
at least that
much in additional revenue and how are
you going to do that and it might be
because you're going to bring in extra
dogs or you're going to raise prices or
whatever it is
some of those ideas we already talked
about but you really want to get that
hard and fast number and for those that
are doing this over multiple years and
we had a few people that
that said like lindsay said she's at
13.50 75
increase every year until 15 in some
states it's actually dictated how much
you go up in other states
they just say by this date you have to
get to 15
and so you can plan this over multiple
years to say okay what's my growth going
to look like
and what is my payroll increase going to
look like and then what do i have to do
to make sure i have enough clients
paying me for those services
yeah i think in this situation i would
be looking at today
and what i need to do especially to
attract and retain we also want to
retain
those key team members and so i know
several of our members have done wage
increases
for people that they already have on
their team or plan to pay bonuses you
can build those into forecasts
the key is instead of looking at your
historical labor costs you need to be
looking
at what am i going to be paying and
where so then how much
is my payroll going to be in total
for 2021 and i would be looking
three years out so i would be looking at
2022 and 2023
because for a lot of you it's going to
take several steps to get there
or you if your market's really
competitive you may have to
bite the bullet and make some big jumps
but we don't want you to do that without
knowing
how you're going to pay for it as far as
rate increases and you work backwards on
those
and where would you put because i know
we talked susan a lot about bonuses
and maybe doing retention bonuses that
are not actually part of their it
becomes part of their wages but it's not
part of their hourly amount
but where would you put those in
i would have another column in my
spreadsheet so i would have
this is their current pay and how many
months of 2021 am i paying their current
pay
and then what will their new pay be and
how many months am i paying that
and then i would have another column if
i'm going to pay them a bonus
and then add all that together to get
what the total payroll is going to cost
me
for this year and so
i would and then once you know what it
is for this year
you repeat those same columns and do it
for 2022
and 2023.
so does anyone have any questions on any
of that before we go on
so i know for a lot of folks that doing
the numbers is not the fun part of
your business we totally get that and
i will say that one of the what we saw
as a positive from covid was that it did
make people realize they needed to
understand their numbers so
hopefully you've already started to get
a little bit more knowledge
about your numbers but this is going to
be critical we already know of
businesses that are going out of
business
because kova destroyed their business
and they didn't have enough revenue
coming in and they
weren't able to pivot or whatever or
they just said it's gotten too hard
the hope would be that when coveted
ended things would be easy again
but now we're finding staffing is a
challenge right now and with the
understanding that
a lot of companies that you're competing
with for these entry-level employees
are already raising their rates we now
are faced with
looking at entry level rates for your
pet care staff being higher
and if you didn't understand the numbers
before you definitely need to wrap your
head around this because
because it can totally work it's just
that you have to really understand
and the whole point is not just to do
numbers for numbers sake the whole point
is
all of the spreadsheets that we are
always asking you to do
are helping you to make decisions so
it's the data is what you want from it
the data to say
okay i can totally hire um another
person to work in my front desk or
another person to work in the lodging
area or whatever it is
and having the actual numbers to back
that up
i tell you it will take a huge relief
off you'll feel some stress doing the
initial numbers if that's not
if that's not comfortable for you yet
but i can tell you the more you do it
the more comfortable it will get and
next thing you'll be like
making decisions really quickly based on
your numbers which is really the goal
absolutely um samantha
said where do you put your pto yeah
paid time off i don't know i'll show up
in there
where do you put yeah i don't know
the computer's not working it's
overwhelmed with all the numbers too
what i would do samantha is if you're
effectively if you're saying you're
paying them
for 40 hours a week for every month
of the year it's effectively already in
there because some of those
weeks they're gonna be off because it's
assuming they're working 2080 hours
in the year the one thing i didn't talk
about
was because i was saying putting an
hourly wage
you have to pay employer taxes and stuff
and so if you know
what percentage that is once you have
your
new staff amount you can multiply
the total stack wages by
the tax rate you end up paying
to also include that if you have other
benefits
if you pay insurance and things that are
actually hard out of pocket costs
if you know that percentage based on
your current payroll
you could also then account for benefits
so i would get my subtotals
by my fixed and variable and then
increase the subtotal
for the employer portion of taxes
and the other paid benefits that you
offer
all right so hopefully that answers your
question if anyone else has any
questions
any other questions on any of this let
us know because we know this is a new
thinking process for a lot of you that
haven't had to deal with the wage
increases yet but
we talked about before that even if
you're not being mandated to do it
we are thinking that in our industry we
thought
really that things would settle down
after labor but susan and i don't
actually think that's going to happen
like i thought everybody
first of all we knew we did think that
the floodgates would open
when covet started opening up and cities
and states started opening up
we didn't anticipate that the floodgates
would open with and that's exactly what
happened
but then we also thought okay so
summer's gonna be really good and then
staffing will all fix itself by the
labor day i don't think that's gonna
happen
and i think that's not gonna happen
because there's just some strong things
going on in the community
not just in the pet industry but in
every industry
that is going to have long-term effects
i think and a lot of people wanting
different work-life balance because
they've seen how great it is to
be at home more often i think they want
more flexibility in scheduling
i think they want and really are
starting to demand a higher
wage for whatever work they're going to
do
so i don't think i don't think that's
going to change i think that we're going
to continue to see
the need to increase our wages for those
new employees and then obviously you
have to consider what's happening with
your current employees
if you have and this is uh we can talk a
little bit about this but
we've seen this done both ways if you
have a manager or like a supervisor
level employee who's making
15 an hour now and now the minimum wage
is dictating you have to pay 15
an hour or your community you just
decide you're going to be 15
an hour for your entry level employee
what's going to happen to that manager
salary
and we've seen some people that just say
hey that's the salary they get for now
because i can't afford to do anything
else
but we also see people that are giving
wage increases across the board so that
everybody
not necessarily a hundred percent the
same across the board but
they're trying to recognize that those
key leaders
might need to increase as well and so
that can affect things too
and honestly you want to make sure that
you're taking care of those people who
have been with you for a long time
so you might want to sit down with them
and say okay i can't
give you three dollars an hour more but
maybe i'll do a little bit
and then that's where some of those
retention bonuses can come in
and just communicating with them what
the plan is
for standardizing all of those
pay all of that pay over time and do you
want to talk a little bit about
pay level susan because i know we've
talked about that in the past yeah
yeah i think it's uh what you should
have is for each
position what is the pay range
for that position because there can be a
point of time if people are not growing
and
learning that they may not just get an
increase for our longevity
of being there so for every position
job description what is the range like
this is
the lowest you would come in and then
this is the most i would pay
for that job because you're really
paying for the job that's getting done
and not the person and that can seem
very cold
but that's where you need to consider
that this is a business and if that
person
wants to make more money they need to
use their skills and contribute more to
the business and you may give
and they may get more pay even if
they're in that position
if they've cross-trained and can help
fill out
and do other jobs as well or
by getting into a leadership role
or growing with you we talked about
growing your own groomers growing your
own trainers
enrichment specialists showing them that
career path
of how they can make more money
but this will help make sure you're
consistent and fair
and people do understand what it's going
to take
to make more money and when they may be
reaching the cap of what that
job is worth yeah i think that's really
hard to do if you've never done it
before so i would really sit down and
think through that
but that can also help you with the
forecasting it also helps you to really
think about we we work with a lot of
facilities
when they start hiring managers that end
up
with too many chiefs and not enough
indians they have they are really heavy
on the management and sometimes that
happens because
you have someone who's been with you a
long time and you're like well it's
i need to keep giving them more money
but and
you really don't have to if they
actually are going to become a manager
then great then you can promote them and
there's
a new pay range for that level for that
position
but you can also set the expectation
that in this position
this is the top pay range you're
probably ever going to get
and if you don't just want to hire
management just to start paying them
more because you also want to look at
how many managers you have
and having those pay ranges you can
easily figure out
okay if i have two people in management
or three people in management
and then 10 employees that are at an
entry level
and what's that pay range it helps you
to really see if you're balanced
on that or if maybe you could take and
we've worked with a lot of people who
are like okay just take one of your
managers out
everything's everything's back to normal
but
we we get into those sticky situations
because for most of us we are working
with a small team and
you really do want to reward your loyal
people who have been with you for a long
time
but you really do also have to balance
that with what can you
afford to pay realistically and making
sure those
that's communicated to your team as well
so i love the idea of those pay ranges
but that that i think is fairly new for
many folks in our industry but i think
that's going to help a lot because you
can really see if you have somebody
that's been working with you for
10 years and they just get a pay raise
every year just because
they can easily start to make more than
your management and that's going to
cause a
little bit of resentment as well yeah
and if anyone's a
member of pet guru college we actually
did
sample org charts and pay ranges and you
can find those in your leader tools
to give you an idea of how you can start
setting something like this up
so the fun part but i love what you said
robin that
even if you can't give everybody the
increase you want to give them right now
if you do this plan for the next three
years you can tell them i can give you a
little bit here but there's more coming
and the reason it's going to take this
long is because we need to also
increase rates with our clients and we
need to do that over time as well
and i think your employees will
appreciate that honesty but you've got
to be prepared to follow through if you
say
i'm giving you a little bit now and then
more in january
come january you better come through
with it or you're going to
lose their trust yeah and i think this
whole
if you haven't already had your some of
your employees come and ask you about
this pay increase stuff
i think you're in the minority i think
most employees start getting win
that this needs to happen and they start
approaching their employer saying hey
when am i going to get 15
an hour or your management might come
and go hey if you're going to be paying
them like 12
an hour i need more too if you haven't
had that happen then consider yourself
lucky we know a lot of facilities where
that
discussion has already happened so this
is one of those situations where i would
be proactive
and i would come up with the plan
yourself and then
present that and let the employees know
they don't have to know every detail of
your plan but
they do need to know what's going on and
as susan said the biggest part that they
need to understand
is in order to give them the increases
you have to get the increase from the
clients and obviously they're a critical
part of keeping clients happy and
bringing clients in and all of that so
they become a part of the solution
really
and you want to make sure that they
understand what the future looks like
and if you don't say anything to them i
can guarantee you they will paint the
worst possible picture in their mind
because that's just how humans are we
we're all like that in the absence of
information we create our own
information and it's usually far worse
than reality so really have those start
having those conversations with your
team if you haven't done it already