Q:


I was reading your book and I came across a section that said you should never spend 
more then 15% of your expenses on salary. I was wondering what that really meant. I am 
getting involved in a practice and the Office Manager makes 38,000. Can you help me by 
explaining how your statement would reflect this type of salary. 
A:

Thanks for the e-mail. Your question concerning staff salary goes right to the heart of 
business 101. Overhead can kill you and usually it's because of staff salary or being over 
staffed. This is especially true when debt has become reasonable. Therefore, a staff person 
making $38,000 a year makes about $800 a month, which doesn't include the employee 
taxes etc. It gets very expensive. Since she was titled a office mgr. I suspect there are more 
CA's in the office. Therefore .. if the practice is thriving and growing and she is keeping it 
at an even keel .. she is worth every penny .. but as downsized corporations learn .. 
eliminating the employee base and have those remaining take up the slack usually turns the 
bottom line around and gets the stock price up.

Have a Great Day

Dr. M