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Badass Business Owners

565 EpisodesProduced by Tammy AdamsWebsite

Badass Business Owners Know Their Business Numbers. They are Small Business Owners serving their local communities who are tired of living job to job and want to grow their business income & their personal income. If it seems like the harder you work, you still can't seem to grow your profits as fas… read more


Ep 33 - 4 Ways Turnover Costs You Thousands of Dollars a Year

Episode 33 – The Local Small Business Coach Podcast

Today’s Topic:  4 Ways Turnover Costs You Thousands of Dollars a Year      


In today’s episode: We will walk through the 4 ways that turnover is impacting your sales but also your profits and how you can stop the bleeding.


Welcome back to the Local Small Business Coach Podcast, I am your coach Tammy Adams.  

Today we are going to play off our last episode where we discussed 7 reasons your turnover might be high. You might recall that we went over the most common reasons your employees or team members might quit or end up getting fired.

In this episode, I really want to discuss, why it is critical that you continually pay attention to your turnover and why you need to keep it as low as possible.

What a lot of business owners don’t realize is, high turnover actually can cost them thousands of dollars in lost sales and profits!

Let’s take a look at a few of the major areas high turnover hurts your local small business. Or for that matter, anybody’s business.


Let’s start with the most obvious and work our way up


  1. Cost of Hiring

When you lose someone, you need to replace them. We all know that. But have you ever put pen to paper and thought about what it costs for you to hire a new person?  In order to do this, you need go back to something we discussed in the past and that is the cost of your time. If you time is worth $50 an hour for example and you have spend 5 hours on interviews and the hiring process, then you are already at $250. But that isn’t all. Take it to the next level.

What could you accomplish in those same 5 hours? How much in sales are lost due to you not working on money generating activities?  For example, if you spent 5 hours on marketing, what would that return on investment be?

Now, you need to avoid the trap many folks fall into. They realize they don’t have 5 hours to hire the right person so they shave that down to an hour. The problem with this is, you are back in the vicious cycle of turnover as you might recall the #1 reason for high turnover is bad hires. So you MUST avoid trying to cut corners on your hiring.

If it takes you 5 hours to find the right person, then this cost will pay back in dividends down the road due to reducing the turnover problem. But more on that shortly.


  1. Cost of Onboarding & Training

Now, once you have hires these new folks, the next major expense you will have is your onboarding and training of them. Now you have time dedicated to their orientation, onboarding and training. You have the cost of another employee being pulled off what they would normally be doing so they can train the new person.

Depending on your set up, you also have costs in training materials, uniforms, tools, etc. While sometimes you can reuse, for some of you and for items, you are starting over with each person.

Don’t forget, you also have an employee who is working at 10% compacity when they start. While they do grow each and every day you still have losses as they get up to speed. Which brings us to our next item.


  1. Cost of Poor Customer Service

This one has two angles. First, let’s continue down the path of the new employee. Since they aren’t fully up to speed on their training or ability to help folks, you are losing sales due to them not being able to help as many folks as a fully functioning employee, nor are they at the level of doing add on sales or full packages.  While they might give excellent service, it is normally at a much slower rate than you need. But the good news is, this gap should close quickly as they grow.

However, I want you to look at this cost of high turnover a little differently. Where you really have a high turnover cost in poor customer service is actually prior to the turnover. Think about it, many of the reasons we have turn over are due to negative reasons. Poor hiring, poor training, poor attitudes, lack of caring and lack of leadership, often leads to people that don’t care. When people don’t care, they don’t give great customer service. When they give poor customer service, your sales go down. When sales go down so do profits. You can only imagine how many sales are lost due to employees with poor customer service. This alone can add up to thousands a year per employee.


  1. Cost of Not Caring or Not Knowing

And since we are talking about it, let’s go over why your profits go down. We just discussed how poor service costs you profits but think about all the other ways your profits suffer.

Do you think employees with poor attitudes or poorly trained are doing their jobs to the standards you expect? If you have a food business, do you think they really care if they put the right amount of cheese in that taco?  If I go back to my ice cream days for example, if an employee was doing huge scoops they were shooting the costs of goods up. But why would they do this? Either A) We never trained them to do it right in the first place or they just didn’t give a crap. Heck, they might even give away product to their family or friends?

These folks who are part of your future turnover are costing you tons of profits through their poor attitudes or poor job performance.


So those are the big 4 as I call them. Let’s recap real quick. You are loosing thousands of dollars in sales and profits due to..

  • The cost of hiring
  • The cost of training
  • The cost of poor service
  • The cost of not caring or not knowing


How do we come up with thousands of dollars?


To help give some meat to this, let’s take an example of just one employee.


**  For the full show notes click the link below!



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Episode Show Notes:  Episode 33 - Local Small Business Coach Podcast

Our Training Materials for Local Small Business Owners:

Starting a Local Small Business Website:

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