If you try to manage the cost (salaries) without managing the driver (tickets), you will always be behind.
Have you ever looked at your monthly P&L statement and thought, “Revenue is up, so why is our profit margin shrinking?” cost driver
The culprit isn’t a villain. It’s a . If you try to manage the cost (salaries)
A is the unit of activity that causes a cost to change. A is the unit of activity that causes a cost to change
If you don’t know what your cost drivers are, you aren’t managing your business. You’re just reacting to it.
You dig into the expenses. Rent is flat. Salaries are steady. But somewhere, a line item labeled “miscellaneous operating costs” has doubled.
When you stop staring at the expense report and start staring at the activity that creates the expense, you stop being a victim of your costs. You become the manager of them.