For those guys that are paying employees based on commission, how do you expand? Someone was paying 40% between two employees, so are you adding employees in two man intervals to work on their own routes, or are you just not adding employees?
The windows aren’t too much of a problem, but my stain crews are eating my lunch, so I would like to switch to commission but the crew could need to fluctuate to meet deadlines and I was unsure of how this is remedied because you can only add so many 20%'s
Brett, i dont quite understand your question. are you talking about needing more manpower on jobs other than a two man crew? My guys make 30% commission by themselves and 40% (20% each ) for a two man crew. If you add an extra employee to a job then they all split 40% three ways (All jobs are maximum of 40% labor). If its that big of a job, my guys dont care one bit if they are splitting commission. they are just happy that they have the extra help and the job is bid accurately (High$$) so they make pretty good money no matter how many guys I put on it. If your jobs are bid to low, you will definately hear about it. Its amazing how employees become mathmaticians when you are talking paychecks:D
I thought this was great.
My main guy is on commission. Just got him a helper who is on hourly until he is trained. My helpers commission was reduced when he got a helper to share the risk of the new employee, but he is treating it as he should, (which is a raise) because he will be more profitable after this guy speeds up.
Thats great to hear that Bob. Some people question me that I “GIVING AWAY MAJOR MAJOR PROFIT” when in reality I am getting excellent employee retention and securing a profit by drawing a line where labor % ends in return. Hourly cant do that.
Yes, Steve that was very helpful, that was my concern with adding additional help, but splitting the same pie into additional slices sounds great.
I have no doubts they would let me know it was underbid, in the winter we shovel roofs and such and my guys aren’t really the newspaper reading types but I ran into the hardware store the other morning and when I got back the first thing was, “Hey Brett this ad is offering to pay $32 an hour to shovel decks,” so I told them," Yeah I’m thinking about going to work for him!", some homeowner was trying to cut out the middle man and hire directly through the classifieds for his own home, but I thought it was pretty ironic they locked onto that scent of money like bloodhounds.
That’s right, Steve. When you pay someone hourly, your payroll costs aren’t fixed. When you pay them a commission, your payroll costs are fixed at the percentage you set. A side benefit is that if they are smart, they will realize that the harder they work the more money they can make per hour, which of course leads to more profit for your company because they are cleaning more windows per day.
Im glad I was able to shed some light on your situation. It doesnt matter whether a job is $400.00 0r $4,000.00, you have to limit your % of labor on the job or it will eat you and your company alive. In this business, most window cleaning owners cant really get a handle on where labor is wasted.
When I was paying hourly, I heard every kind of excuse imaginable as to why jobs took so long. Most jobs were taking two-three hours longer than I would have taken to do them (I work at a consistant pace and not like a maniac). I heard the excuses like: the traffic was bad, the wood grids were stuck in the windows, too much stuff was in the way, too hot out, too cold out, got lost and couldnt find the house, on and on… EVERY SINGLE DAY!
Heck, I couldnt be there to verify if they were slacking of actually telling the truth. Then I switched to commission and my whole business was reborn. When I was paying hourly, it always seemed that everytime I would get a chunk of change in my bank account, it wouldnt last very long because of:
My guys were making good money on jobs that were very non profitable. Why do they care if a ranch home is priced at $180.00 in and out when in reality, that job hadnt had a price adjustment for 5 years and should be at least $240.00?
2). Supervision: I couldnt be there with them on jobs so they milked the clock for all they could and make up some excuse to cover it.
I would say that if you arent currently on a commission based pay scale, give it a shot for 2 months like I did years ago. I guarantee that you and your guys will like it (As long as your jobs are bid correctly).
So I am wondering what kind of expenses you would take out of the job before you pay your employees. Obviously rentals or special equipment but what about vehicle insurance or vehicle repairs? If you have a two man crew and they are utilizing one company vehicle, do you then take out the monthly insurance cost over the course of two paychecks? Also, I am currently paying one of my guys 50% of whatever he brings in. I have found that it eats up quite a bit of profit and he still goes slower than me on the jobsites. I can do in 4 hours what it takes him 5.5 to 6 hours. I think maybe he knows he has a soft cusion to land on even if he doesnt bust his ars.
Thats right, they are paid 30% each (40% maximum per job per crew). They are supplied with a company vehicle, company gas card and company tools. Pretty much anything that involves basic window & gutter cleaning I supply to them. For example, if we are doing anything that involves material (gutter seam sealant, gutterguard, Gutter screws etc.), I will deduct material from the gross of the job. I dont pay commission on material I have to purchase for a job. It only makes sense. As far as commercial liability insurance on my company vehicles, I pay for all that through the company. My guys are full time with me and are not sub contractors. The bottom line is that your jobs have to be profitable to pull the commission thing off. If you are the on the low side, it will force you to bring your prices up to date (you should anyway). Commission will do a fantastic job of auditing your jobs everytime they are done and sorting out the non money makers.
Before I switched over to commission, I was basically flying by the seat of my pants so to speak. I had no idea that I was so far back in the red on a lot of jobs. (i do mean alot too!) The guys would come back in the shop after a days work and fill me in on certain jobs that were in line or were just riduculously low. I HAD to make changes before the next service. Basically it forced me to make the tough call and inform long time customers that we had to make serious changes or we would end up closing shop or looking for different clients. I had to tell all of them that we hadnt had a price increase for over 6 years (yeah, I know, very stupid) and that we were forced to increase. Some jobs even doubled thats how bad it was. No one left as a result.
Looking back at all of this put things into a real perspective for me. I was paying $12.00 per hour per guy back then and my jobs were basically bid to make money having an employee getting paid $6.00-$8.00 per hour. I would suggest to any window cleaning business owner to run the numbers at the end of the week to see where you stand as far as profit and labor. If you cant get it to balance out, you need to make serious changes. Job audits, production audits etc. Just my experience and .02 cents.
There is a theory of the 33-33-33 rule thats out there. 33% labor,33% taxes, 33% profit. I dont know about that. in the real world of running a service business, It is very tough to get into a 33% maximum labor on jobs. I know, I have struggled with this for years and came close a handful of times. Its always been somewhere near 38-45 in my business. Ive had production meetings with crews that are coming in high on % and it only lasts for a while and goes back up. labor will always be the most frustrating part of your business if you are paying an hourly scale. Too many scenarios to deal with. Commission is higher than most hourly window cleaners make (I look at it as great employee retention) , but I know that I am guaranteed profit. Guaranteed profit? who doesnt love the sound of that! 8-D
Ok great. Good info here. So any suggestions on how to break it to my employee that i cant pay him 50% anymore? He’s been a really reliable employee but he’s making $20/hour on route work. It’s a little rediculous. For those of you who pay fixed comissions, do any of you give bonuses or vacation time?
When I switched over to commission, my guys were making a little over $12.00. That is what I have based everything on if I have to pay anything hourly (like vacation pay). They get 4 hours of vacation every month that they are working- They only get a maximum of 40 hours of vacation per year and thats it. Being 98% residential, my crews will get laid off for 2-3 months during the winter while drawing from the unemployment fund. That is why I only pay one weeks vacation and thats it.
As for your guy making 50%, you’ll have to have a heart to heart talk with him and tell him that your expenses arent getting covered. He is actually making way more money than you are with [B]“0” RISK and “0” LIABILITY[/B]. That is an insane amount of money to pay an employee. He is making more money than you and you will have to get him down to at least below 40% (30% would be more ideal).
Remember that it very easy to get caught up in feeling like an experienced window cleaner is worth gold. The truth is that I have trained numerous “green as grass” newbies and have had excellent results in just over a few weeks. Its all in how you train them and taking the time and patience to get through to them so that they understand how windows are cleaned. Good Luck>
I’m sure most of these folks are no longer as active on here as in the past but I have a question:
Does the commission % include the employee taxes %? Meaning 30% commission is really 24% for them now and my 6% tax. Example: 3 guy crew with me as lead (I get no pay from it) the job is $100. Would they get $12 a piece and I take and pay $2 tax for each of them or do they get $15 each and I pay ~$3. I know it sounds like peanuts but it’ll add up quickly with a couple crews working 40 hours.
I have 2 guys with me most mornings and one most afternoons now with 2 others that are PT. I have a hard time doing % as I can clean windows 3-4 times faster than all but one of them. I tried raising pay to $20 hr for one day to see what happened-the guy did a 300 sq/ft casita in 2 hours while I did ALL the exterior, hihg and low of the main 8000 sq/ft home!?!?!?