well yeah.
What we did to prevent short days is carry some marketing pieces in the truck so when they are done for the day they head to the closest nice houses and put out flyers for a few hours. They are required to work 8 hours a day so if they are done early they will always get full days. You need money saved to always cover those short days but you get jobs from the material they put out. This also creates stability for them in knowing they will always get paid which helps you keep your employees .
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having been all sorts of shapes and sizes over the decades, in my observation, before making the jump, the solo op needs to have the right pricing structure in place and an already working marketing system from day 1 of a new hire.
this is probably never the case, usually the pricing is way too low, esp to pay an employee the standard 30% as wage (all annualized and averaged out over the āpayroll hoursā it takes, not job hours)
usually the solo op has an incorrect view of annualized workable hours for the typical employee
usually the solo op has minimal marketing, leave alone a marketing machine that can consistently produce more or less as desired, on demand
there needs to be (ideally but never the reality) a clear all aspects HR plan from the start, what solo op has that from day 1 of hiring?
oh, and donāt forget a total operations training system too, one is now a school, educating continuously
Most who make it past this that are a success have free, trusted, skilled and dedicated labor like a spouse who works in the office full time
as the book SImple Numbers called it, āthe badlandsā of growth, the chasm from solo to fully functioning employee based business. Where enormous amounts of capital, skill, long hours, low pay, the right people at the right time, are needed to cross over successfully
some of this can be sped up with large contract sizes, larger jobs that are high man hour/low driving and jobs where employees are expected and the norm (mid rise, high rise, hospitals etc), but then that means there is enough experience/skill to get these jobs (marketing) and complete them succesfully
thereās too much unknown for the typical solo op to hit it all right on the first go unless he is an experienced business owner/manager already
its chicken or egg first syndrome for the first out solo op to get it all right
some of the above is probably what youāre referring to Dave when talking about the franchisor handling things for you?
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So while it has been proven you can indeed make profit, another question would be:
How much will quality suffer in the short term and how many customers who are used to the personal touch will you lose?
While none of these really matter if you have a marketing campaign that generates enough customers to replace those you lose.
I guess it makes me think about what type of company I will use for other services, I guess for my perspective I would be looking for someone similar to myself even if it meant I have to wait a few weeks for a opening.
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Fantastic post.
I canāt get past hiring people I know, and I realize that is a self-limiting situation.
I will never (could probably never?) get to that point, and thus I can never really to an āout-of-the-fieldā situation.
To those that can, congrats. It is the customer interactions that I love the most and the ābusinessā side that I like the least.
Again, Really good post.
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Nice comments, Bruce. I always appreciate your perspectives.
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talking to a younger owner of a product sales business and the one thing about window cleaning is the choice to be solo and still make a satisfactory living exists
many businesses require many people for the business to even function, many will need 5-10 at their smallest
in this regard window cleaning is unique, the laboring over the decision to hire and grow or not doesnāt even exist for other businesses, lol
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in my observation, many overgeneralize:
"my guy can do $60 an hour
$60x8 hour day = $480 a day
$480x5days a week = $2400 a week
$2400 a week x 52 weeks = 124,800 a year
āif I pay him $12/hour, Iām rich!!! I can sit on the beach all day!ā
this type of thinking is not an annualized thinking
is the guy generating $60/hour average over the whole year? thatās the number you need (at least the ownerās stats to start with)
is it an 8 hour day? whatās missing? the drive time. I have seen 6 billable hours out of 8 payroll hours as an annual average
is it always 5 days a week? thereās sick days, holidays, personal days and weather
is it always 52 weeks a year? thereās vacations and winter, you may be in a long winter area
in so cal I have found to plan on 80-85% of total possible days. incidentally this lines up with places that run equipment, they plan on 80% up time, 20% down time as well)
so adjusting for the above the $60 needs to be $96.76/hour to generate that 124k
boom, pricing is now way low at the incorrect $60, nothing is working as originally planned and solo op feels hes losing money hand over fist now
and BTW, a $12/hour guy wont be happy very long, standard labor/operations wage pay is capped 30% for most service businesses
adjusting for all the above, $21.75 per payroll hour is what the top out pay would be generating 96.76/hour, per 6 billable hours per 8 hour workday, 80% of the possible workdays a year . . . as an annualized (12 month or 52 week) average,
see how so many can get themselves into hot water real quick?
many should look at their local mechanics and see what their hourly labor rate is in their area, check out a few and see what you see for your area. my recommendation for anyone is their annualized hourly production should be close to that, like within 5% for a pricing structure that will sustain growth and be profitable, even for a solo op.
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Great post. Excellent advice at the end regarding mechanics. Most forget that we are a service business just like all the othersā¦ the fact we clean windows is not that important in the grand scheme of the marketplace.
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Isnāt this line of thinking actually starting from the wrong end?
To illustrate, when you buy a car, never get into monthly payments, because it can be manipulated by the dealership, but you end up paying more in the long run. Rather, talk total price of the vehicle.
So instead of starting from the employees wage and working up to annual income, wouldnāt it be correct to start from what you are making or projected to make and start working our way down so that employee wage is the end point?
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i would think this is pretty standard knowledgeā¦ but the math you presented is backwards thinkingā¦ (which you may have done on purpose)
if you do math like that: āmy guy can do $60/hr times 8 hours therfore Iāll make X amount of dollarsā¦ā then ur doing business backwards and the numbers arenāt real ā¦(not only for the reasons stated [sick days, rain days etc] but because now your business plan is depending on your employee. Your employee should depend on your businessā¦ not the other way around. )
the correct way to figure it is to ask yourself how much āproductionā per hour/day do you need in order to pay a guy a $X/hr.
i think in terms of production per day. if my guy isnāt bringing in X amount of dollars per hour per day, then iām probably paying too much in LABOR (depends on how many hours he works) OR the job was undersold. Either, are serious problems.
exampleā¦ (store front route)
you WANT to pay a guy 10$/hr (keep it simple)
you WANT to give him 40 hours/week
you WANT the business to gross at least $30/hr to presumably cover all costs and still earn a profit.
ā¦then you need to know how much in production u need. (and can ur prices sustain it)
so using the aboveā¦
if you did $325 day in production minus labor $80 (im keeping it simple not including taxes etc) = $245 .
$245/8 production hours= $31/hrā¦ so that tells you that your min of production per day needs to be $325 to hit those goals.
so you work up your business to where it has $325/day coming in, then you can hire that person and give him 40 hours.
sidenoteā¦ you can do the same formula with a part timer.
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ha! you beat me to itā¦ but mine was more detailed.
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keep in mind iām not referring to what is correct, but how most start out thinking
but I suppose I should have started out, the solo guy says I can make $60 hour, so if I hired and that guy made $60/hour . . .
I would say a big problem is there is no solid reference source of averages, stats and expectations āout thereā to benchmark off of from the beginning. the forums are light years ahead of the way things used to be, but its not like other industries where thereās been decades of things already figured out. Like a mechanics book stating how much labor time for this and that etc. And of course another contributing factor is all the variables from job to job etc.
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I was just distilling out the usual factors that lead to many peopleās problems
I could have picked up at x per week or x per month but that would have left out the payroll hour vs billable hour issues
and yes, most probably think in a daily total format, but there are hidden issues many times in the daily total format as I illustrated
also keep in mind, the point with a weather affected business is to always look at things annually, this is our business cycle, one must include all the ups and downs of the cycle to get the true picture
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āweather cycle businessā - Iāve never heard of that term. i like it.
I think most āweather cycle businessesā project for 17 days of production/monthā¦ that is actually 20 days of production minus 3 rain days. Thatās how we do it. thatās how most service industry busineses project montjās revenue- from my experience.
so building on my last exampleā¦ if you have $5k of production scheduled for the monthā¦ divide that by 17 = $294 production/dayā¦ so as a Mgr/owner you should instantly recognize that your going to tank your business by hiring that employee unless you either:
- raise your prices
- lower your costs
- lower your labor costs
#3 is the easiestā¦ send them home an hour early and your back at your $30+/hr goal. (of course, now u risk losing ur employee cuz not getting enough hours. )
PLUS u have 3 days of potential ānothingā. So u must plan accordingly. For this we train all techs in sales too.
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Yes, i meant to add that i didnāt conclude that was your thinking but more of popular thinking.
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I like the stat about 17 days production per month
an interesting thing to note is that with 52 weeks a year, that averages out to 21.65 m-f workdays days per month
so instead of one having disgruntled guys for short days, it becomes about maxxing out the good days (seasons, months of years, whatever) to keep the same average
if $300/day is used:
$300 x 21.65 = 6495/month
adjusting for 17 days: 17/21.65= .7852
so $300 / .7852 = $382/day instead
so if a guy is scheduled at $382 a day then it will average out to $300 a day and the corresponding wage the employee is counting on after the bad weather days each month
that was fun
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you got it ā¦as long as in your example you ACTUALLY have $300/dayā¦ otherwise yoyr working backwards again.
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