Do any of you guys have just one employee? How much does it cost to keep one employee going with tax/workman’s comp and everything?
I had a long conversation with a guy that does fencing out here, he was telling me how having employees is NOT worth it if you only have one or two out here in Cali, and that I would make more money handling the work load myself. I’m thinking maybe he just didn’t know how to handle the work load correctly.
What are your thoughts?
I think it’s only worth it if you just have too much of a workload to handle by yourself. Pretty much if you are already working full time and need additional help so you can focus more on the marketing aspect. But only hire people who are competent enough to handle ladders all day and have a good work ethic. ( otherwise you will just have more stress on your hands )
I think 2 weeks of training someone should be enough time for them to be comfortable on their own. Remember though that unless they are producing $300- $500 worth of work for you then it really isn’t worth all that trouble. Workman’s comp. is very expensive. I think in California it is around 16%. I could be wrong though.
Do you work a second job or do you just do the window cleaning?
If you plan on expanding you’re going to have to make the leap and hire just one at some point, though hopefully you’ll be on #2 soon afterwards. The first employee is a big learning experience and you’ll probably need more than just a few weeks for [I]you[/I] to learn the best way to handle [I]them.[/I]
For me it did make financial sense to just have one employee. And after I had one, two was easy, three was a breeze, and so on and then it was definitely more profitable. Taxes are on a per dollar basis so it’s relative to the number of employees anyway, workers comp is the only real difference.
Edit: Also, insurance around here seems to be much cheaper than other people on the board but my first WC policy was $1008.00 for up to $30,000 in payroll and was through the allegedly more expensive state pool since it was my first year. So that’s only 3.3% or 6.5% ish for one person. Not a big deal.
Wouldn’t it be easier to just hire “subs” Make them pay for their own insurance. Then 1099 them at the end of the year as an expense?
It depends on your workload if you have enough jobs to be able to train an employee and the equipment to cut them loose after a few weeks and employ them 30+ hours a week then it is definitely worth it. If you are already working 40+ hours and are turning away jobs for your lack of time then it is time to hire.Of course you have to charge enough to include payroll in your overhead and still make a profit.
Having a part time or full time employee as a helper with me on jobs has never made a job that much quicker so they have to be motivated self starters that i can have doing jobs on there own. 2 people will get a job done 1.5 times faster than 1 person and 3 people are only 2 x faster than 1.
Also workers comp/ L&I is based on how many hours they work and/or how much their gross pay is.
It’s worth it as stated before if you want to grow. My work load increased when I hired my first employee. I knew I could only do so much in one day. With a helper I was able to double the work load. The cost becomes a little factor. It only comes into play when they are not making you money. There have been days where as my employees ran into problems and I only profitted $100. But in hindsight it was great for me because I learned how to manage those bad situations and still turn a profit. What I will advise you is to make 100% sure you are clear in how you want things done. It’s great to take them out with you for a full year if possible. It allows them to see what “Clean” means. My employee now understands what stains will come out and what won’t. Sending out an employee blind and then telling them you want everything spotless is going to blow up in your face at somepoint. Send them on multiple job, $600 day and they blow 1/2 the day trying to meet your expectations because you did not train them correctly will make you scramble to fix that problem. But the damage may have already been done cause all they will hear is “Spotless”. My cost for workmans comp was based on a estimated projection of pay ($15,000.00) for two employees 1 full time 1 part time. Cost was almost $1000 for the year. Had to pay it all up front. No payment plans here. As far as the cost of paying them I dont have the exact figures in front of me, but it was very little. Something like $20 per week per employee. I had my mom doing those books as she had a business in the past. This year I have hired a bookkeeper at $90 per month which includes book keeping, paying my sales taxes, federal taxes and payroll. The book keeper also charged me $400 to review all my books and get everything in order for next year. I will say I am very happy I hired a book keeper. He ran a report and I was doing something in quickbooks wrong. Be he showed me what my “Real” profit was since 06. Nothing to scream about, but nothing to laugh at either considering I started this business in 06 for under $1000. It also helped me understand I can afford employees, easily. But enough rambling. It’s worth it.
Yes, it is easier, but in order to comply with the federal definition of a sub, an avoid a problem if you are audited, you can not set their schedule for them. That makes it tougher to schedule the job. You first would have to check on their availability and then tell the customer when they would be there.
very iffy subject it seems like
Your friend is right in some aspects. Its not really worth it unless you are wanting to transition into managing the company instead of doing the work. keep in mind even though the employee is increasing the ammount of work your company is producing you still have to manage the customers that make up that extra work load so that means more of your time focused on the management side of your business and less of your efforts that go towards job production. Plus increaseed production means an increased budget in terms of supplies, vehicle expense, marketing, workers comp etc. So in the end 1 guy may increase your net profit but you may find the increase in net profit is not worth the added effort and headache. On the possative side its always more enjoyable working with someone and if you are sick you can send him out to cover jobs and there can be some increased profits if you manage things well.
Your best bet is to begin looking at stepping back from doing the labor and having two or three guys do the work while you focus on growing and managing the business. You may not feel like you are there yet but now is the time took put together a good business plan and map out the steps it will take to get there before you hire someone. Then you can builld up some momentum when you hire this guy and it can excell you ino a position where you can shift gears and hire two more guys. Remember if you can keep 2 guys (you and your guy) busy full time at lets say 4000.00 gross per week, 200,000.00 per year gross. Then if you had someone full time on top of that (yourself) managing the office along with marketing and sales you ought to be able to keep another guy busy with increased attention on the entrepreneurial side of your business, at a gross revenue of lets say 300,000.00. Lets say you only net 20% is still 60k ayear wich is not fantastic but its not bad either. Plus it sets you in position to hire on another one or two guys the following year to bump you up in net profit.
I am in the same position right now. I have hired on and layed off a feww times and right now I don’t have any full time employess. I am using subs for extra work. everytime I have tried to make the transition out of doing the labor I have hit a road block. But each time I have learned something new from it and now I can see clearly what is needed to make that transition. I am setting a plan in place now to go for it myself.
You don’t have a business till some else can do it for you.
Right now you have a job.
My one guy is running my wedewwindows back in TN
and I’m living in AZ
Sure he getting $50,000 a year but he making me enough to
live out here. I have rent though 20 in the last 15 years but when you find a good one
pay them well and teach them how to run the business.
You always collect the money and stay in touch with the clients .
Phil
Work on your business not in it. e-myth.
I disagree.
Why do people make that comment?
I understand the idea of having systems in place, and removing yourself from the equation so you can devote more attention to growing your business - but to state that just because you don’t have an employee you don’t own a business is frivolous.
The real difference between having a job or running a business isn’t as simple as whether you have employees or not. There are several factors like pricing philosophies, whether you continue to educate yourself in your trade, etc.
There are many business owners who are content to be one man shows and some who have had employees and gone back to being on e man shows. I wouldn’t consider them to just have a job.
I agree. I get the concept of the entrepreneur side of your business but saying that you don’t have a business unless you have employees is just making making a statement based on the arrogant presuposition that know one else understands the concept you do about the importance of focusing on the entrpreneur side of your business. Just remember that the entrepreneur position in your company is a full time job as well. Based on that premise one could say that you don’t have a business unless you don’t do anything in the business at all except collect the profit. You makes no decisions and give no input to the business, no work at all but just collect a check. No wait that would be considered accounts recievable. Ok you don’t even do that, you just spend the profit out of an account that your employees deposit into from the business thats when you are an official business owner! No offense Phillip I’m not wrangling on you but rather the concept of the statement. your probably a great guy 
is it worth it? Of course. We are all hard workers, imagine duplicating yourself, and still not make any money.
Tony, I’m not sure I understand how pricing philosophies, trade education, etc., contribute to having a business vs. a job.
I think the argument goes like this: If you are the only true employee of your business, then you really don’t have a business. You have a job. The reason is that if you choose not to go to work in the morning, the same thing will happen to you as will happen to Jim down at McDonald’s - you won’t make any money.
Not saying I agree or disagree… just curious what pricing philosophy or trade education has to do with the difference. Looking forward to hearing your thoughts. Thanks.
Michael - If you work for McDonalds you probably won’t do any educating of yourself to make yourself a better cook or front end clerk. As business owners we use this forum and other means to educate ourselves to be better at what we do. As for pricing philosophies it’s similar. If I’m content to work for very little (I call it making a wage) instead of working on bettering you business and your bottom line then you have a job not a business.
There are plenty of people who have jobs but continue to educate themselves throughout their career – doctors, lawyers, teachers, etc. I don’t think that has much to do with it.
I believe there’s a difference between owning a business and being self employed. You may make excellent money being self employed, you will certainly have more freedom than an average job, and you may still have an asset in the form of a client list and equipment that you can sell…but there’s something to be said about a true business that can generate its own profit with almost no input from you. Having said that, if you have procedures and rules in place that you follow yourself that would allow you to fairly easily hire someone to fill your position quickly then there’s not much of a difference at all, you’re simply choosing to fill a position in your business because that’s what you want to do.
But ultimately, who cares? It’s all semantics, if you like what you do and you’re making money the way you do it then more power to you.
Cali workers comp: 23% of payroll/ $1800 deposit 
Yikes! That’s extremely discouraging for a small business owner to take the leap and start creating jobs. I’m sorry to hear that.
Despite it, I’d still say it’s worth it to have just one employee for a time even at those rates if your goal is to expand.
