For over a decade, the goal has been to have at least 150K in AGI per FTE. Inflation, escalating salaries and benefits costs, and operating expenses ll have forced us to revise that equation.
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Hey, everybody. Drew McLellan here from Agency Management Institute. This week coming to you from beautiful Orlando, Florida. We just wrapped up teaching the Money Matters Workshop here at Walt Disney World. And one of the topics that came up in the workshop was the AGI to FTE ratio. For many, many years, the rule of thumb has been you needed to have $150,000 of adjusted gross income for every full-time equivalent. But the reality is things have been shaken up in the last couple years, especially when it comes to staffing and the cost of staffing. And so we've got to adjust that metric to reflect the reality that we're all living in today. So today, your AGI needs to be $175,000 per FTE to make sure that you are staying profitable. Your employees are getting more expensive and so you've got to have more revenue coming in the door to justify every full-time equivalent that you have on staff. So from now on, AGI.., gross billings, minus cost of goods, equals your adjusted gross income. That's the money you have to spend on the agency. So when you look at your staffing for every full-time equivalent you need to have $175,000 of adjusted gross income to justify that hire. It's a great, clear, objective way to know when it's safe to hire and when you don't quite have the room to hire.So go from 150 to 175 and you should be all set.
All right, I'll see you next week.
