Controlling non-employee costs

One of the key metrics is to control non-employee costs.
As part of the annual cost plan, non-personnel costs should be set at 25-50% of the total costs.
When determining the annual cost plan, a certain percentage of non-personnel costs will be incurred.
You need to have a clear understanding of that percentage.
The degree of achievement of that percentage (the percentage of non-personnel costs in the overall cost) is the indicator.
An achievement rate of 100% is desirable, and anything below 80% is a failing grade.
For non-personnel costs, the non-personnel report by vendor is an important report to track and manage.
The next metric is the percentage of SG&A target achieved.
In other words, it is the percentage of SG&A cost targets achieved.
This is calculated in the same way as the other indicators.
Anything less than 80% of the target is a “”red”” issue. (80% in this context means 20% overspending against the target.
SG&A as a percentage of sales varies greatly depending on the maturity of the business.
In a more mature business, SG&A as a percentage of sales should be less than 10%.
This ratio can exceed 25% for new businesses that need to invest in sales and tools for growth.