Scaling Your Labor Force Without Ballooning Overhead
In the restoration industry, labor drives revenue—but it can also quietly crush your margins if you’re not strategic. As you scale beyond $5M, labor management gets more complex: you’re adding techs, PMs, estimators, admin, and field managers. The risk? Overbuilding your team faster than your revenue grows.
Here’s how to scale your labor force intentionally—so you can take on more jobs without ballooning overhead or putting cash flow at risk.
First, Understand the Difference: Billable vs. Non-Billable
To grow profitably, your ratio of billable to non-billable labor must stay healthy.
Billable labor = techs in the field generating revenue
Non-billable labor = office staff, project managers, admin, etc.
As companies scale, they often overhire on the non-billable side—especially when systems aren’t tight and leadership is overwhelmed. The result? Labor costs go up, but profit doesn’t follow.
Tip: Set a target labor efficiency ratio (LER). For example, total billable labor should be at least 65–70% of total labor costs.
Build for Capacity—Not Convenience
Hiring because you’re stressed today creates bloated payroll tomorrow.
Instead:
Track actual job volume per tech or PM—then hire when a crew or manager hits 90–95% of capacity.
Use job costing to analyze how much revenue each field tech is generating.
Automate before hiring: Can a system or process replace what you thought needed a full-time hire?
Use Tiered Labor Models
You don’t always need a $30/hour tech for every task. Consider building out:
Helper roles for moving equipment, demo, cleaning
Tech Level 1 / Level 2 / Level 3 structure with clear wage-to-skill alignment
Floating labor pool that can shift between divisions or job types depending on volume
This lets you deploy labor more cost-effectively—matching skill level to job type while preserving margins.
Subcontract Strategically—But Track Closely
Subs can help you scale fast without payroll risk—but only if you’re tracking margin correctly.
Don’t assume subs are always cheaper.
Require clear scopes of work and firm quotes before assigning jobs.
Use job costing reports to compare gross margin on subbed vs. in-house jobs.
If subs are cutting into margin—or delivering inconsistent quality—it’s time to reevaluate.
Monitor Labor Burden (and Its Trend Over Time)
As you add employees, don’t forget to track total labor burden:
Payroll taxes
Workers' comp
PTO
Benefits
Downtime
Training costs
Labor burden can add 25–40% on top of hourly wages—and it grows as your team does. If your burden % is creeping up each quarter, that’s a red flag for long-term overhead creep.
Solution: Use a labor burden calculator and refresh it quarterly to ensure your pricing and capacity planning are still accurate.
Know the Hiring Triggers in Your Forecast
You shouldn't be guessing when it’s time to hire. Tie labor planning directly into your financial forecast:
How much additional revenue must be booked to support a new tech?
Can current cash flow support the onboarding and ramp-up period?
Are you hiring ahead of demand or chasing it?
Forecasts aren’t just about revenue—they should tell you when you can afford to grow your team.
Growing your labor force should increase your profit—not just your payroll. When you track the right numbers and scale intentionally, you build a stronger, leaner company that can take on more work without risking cash flow or profitability.
Want help analyzing your labor costs, ratios, and readiness to hire? At Kiwi Cash Flow, we help restoration companies build financial systems that support smart, profitable growth. Book a strategy call today and let’s take a look at your team structure before you make your next hire.