Efficiency Ratio
You're adding revenue but also adding cost. The question is: how much output do you get per unit of input? Efficiency ratio is a metric comparing output to resources used—e.g. revenue per employee, or revenue per hour of labor. Higher ratio means you're getting more from fewer resources. It's a key indicator of operational efficiency and scalability: can you grow revenue without proportionally growing cost?
Same team size, different leverage. One coach has $320k revenue with two associates; another has $200k with the same headcount. The first has a higher efficiency ratio—more revenue per person. That comes from productization, delegation, and clear documentation. Tracking efficiency ratio tells you if your scaling moves are actually working. Labor burden and cost analysis help you see the full picture.
More output per unit of input = better leverage. Measure it so you can improve it.
What to measure
Revenue per person. Total revenue divided by full-time equivalent (you + team). Simple and comparable over time. If you add a person and revenue doesn't go up proportionally, your ratio drops—unless you're investing in capacity for the next phase. The goal is to see the ratio hold or improve as you scale.
Revenue per hour (yours). If you're the bottleneck, how much revenue do you generate per hour you work? Time leverage and delegation should raise this—same or less of your time, more revenue because others are delivering.
Cost per unit of delivery. Job costing and cost analysis show what each project or retainer actually costs. Compare to price. Efficiency isn't just revenue; it's margin. Higher margin per unit with the same or better quality = better efficiency.
What breaks
Adding cost without adding output. Hiring before you have documentation or SOP often means the new person needs so much of your time that output doesn't rise enough. Ratio drops. Build the system first; then add people to run it.
Ignoring the ratio. If you only look at revenue, you might celebrate growth that came from adding cost. Efficiency ratio keeps you honest: are we getting more from each unit of input?