Business literature is loaded with vanity metrics, with each sector and company boiling down performance to a set of magic indicators.  Most of them don’t mean much without context, except the golden rule, that if you spend more than you have, your adventure will not last long.

Revenue per employee is a productivity metric that reveals how much gross revenue each person working at your company generates.  In other words,

      $100k revenue  / (you + wife) = $50k each

This metric levels the playing field between Fortune 500 and a garage business by making scale, in the form of how many people you employ, because there’s often a range to home much one person can contribute.  The reason I find this number powerful, is because it means something very different to a small business owner than it does to a stock analyst.  If three friends own the business with ten employees, it represents how much they could consider taking out of the business to distribut among themselves and those that work for them.  If you work at a large company as an employee, your compensation is set in stone with most of the gains going to management.

The example is simplistic, but the context changes when you use it to talk about a lifestyle business or a public company.  When we talk about Craigslist generating $335 million annually with only 28 employees, the difference of being private with such spectacular revenue raises the following possibilities:

• employees that are paid a lot more, or a lot less that the norm: there’s likely not a HR department within a small team,