A recent question I received:

If a company offers no sick pay or vacation pay…but is about to start – which is more important to offer first, anticipating that the next year we can offer the other? Any recommendations re what needs to be in the bank to be sure to cover the expense – obviously, you’d have to figure the basic numbers, but anything else I might not be thinking of? We already offer health insurance.

Both sick pay and vacation pay are an overhead expense. Deciding which to offer first is really just a judgment call. Which would be more valuable to your employees, which would cost you the most? At my age, sick pay would be far more important than it would be to a 24-year old employee. Does anyone else have an opinion? (not about my age)


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The cost needs to be included in your markup (by the way, gang, that’s why every business has a different markup factor!) Figure out what percent of your total sales the expense will probably be, factor it into your markup and you are good to go. If you want to build up a reserve account for safety reasons, then I would set aside the same percentage from every check in the door. Better safe than, “How do I pay this?”

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