The main frontpage headline of the May 18 Seattle Times was about how the Seattle Public Schools bought land 40 years ago anticipating the need for more schools, which didn’t materialize. They are locked in on land leases at well below market rates.
The reporter wrote something stupid, “[SPS] … will make just over $900,000 this year on properties that generate many times that in revenue for the leaseholders.” His wording implies the business owners are getting rich because of this rent deal, and I’ll bet non-businesspeople buy into this.
Rent should be a small cost of business. We subscribe to Business Reference Guide, and it has cost averages for hundreds of industries. Here are percentages of rent to sales for industries and business types we all know.
- Manufacturing ~2%
- Distribution ~2%
- Dry cleaners ~18%
- Dairy Queen ~8%
- Furniture stores ~8%
What are your key numbers?
In our business an important one is the number of referrals, specifically the type of referral. All businesses are different, and some pay attention to:
- Number of bids submitted
- Responses to direct marketing
- Cost of goods sold
- Revenue per employee
What they are doesn’t matter as much as knowing what’s important and tracking them. Plus, taking action when they go off track.
“If the world were perfect, it wouldn’t be.” Yogi Berra
“You can’t have everything. Where would you put it?” Steven Wright