Unit economics
Labor economics, job costing, utilization, pricing, customer profitability, and service execution.
Reading path
Hourly wages are not hourly economics. A useful burden model combines payroll taxes, benefits, paid nonworking time, supervision, tools, travel, training, bench time, and productive-hour assumptions at the job and service-line level.
Service contracts can look attractive because revenue recurs, but the real value depends on labor coverage, parts usage, SLA burden, renewal pricing, and the discipline to reprice underperforming agreements.
Vendor onboarding is where payment accuracy, fraud prevention, procurement discipline, tax documentation, and third-party risk meet. Weak setup controls create problems that invoice approval cannot fix later.
Labor is often the largest controllable cost in a service, healthcare, manufacturing, or field operation. Utilization and overtime discipline show whether management is planning work or absorbing chaos.
Scheduling and dispatch determine utilization, response time, route density, overtime, customer experience, and gross margin. In service businesses, the schedule is the operating model.
Revenue rankings can hide margin leakage. Customer profitability analysis shows which accounts create value after labor, service burden, discounts, credits, working capital, and support costs.
A poorly designed sales comp plan drives the wrong behavior, shows up as a diligence issue, and costs significantly more to unwind than to design correctly from the start.
Management compensation in the lower middle market is frequently set by founder intuition rather than market data, which means some executives are underpaid (creating retention risk) and others are overpaid relative to.
Key employee departure during exclusivity leads to deal termination or a material price reduction in 23% of cases.
Revenue and EBITDA per employee are early PE buyer benchmarks. At $140K revenue per employee versus a $210K median, buyers model a large improvement gap.
The top 20% of customers generate 80–90% of actual profit in most service businesses. PE buyers model gross margin by customer in the first week of ownership.
Most middle market companies treat recruiting as a reactive event: a role opens, a job is posted, and the hiring process begins.
Most middle market companies spend $8,000 to $25,000 to hire a new employee and almost nothing on a structured onboarding program.