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I think, actually knowing what one’s costs are, employee costs beyond salary and what if any intangibles there may be, are the first steps. If an employee generates say, $86,000 but costs $30,000, after all the other expenses has he really made you any money? Or just helped wear out a van and some equipment. Everyones numbers will be a bit diferent, but I think an employee working on his own needs to generate $100k to be adding to the PROFIT.
YMMV
The way Sutton did it is about exactly the way I did it. I would say if you plan on paying your person $50,000/yr., it will be a very long time (if ever) that you’d make money on him.
There are other ways to add an employee. Maybe put on a helper first. Give him/her 25 hrs. to start with. Add to your schedule a couple of jobs per day. See how it works out. Maybe a good helper could work into another full time employee as you grow the business.
I would also be interested to know what kind of percentage range people are running for cost of goods (all cleaning products and materials). What kind of range do you find possible as a one man operation, and what is an expected range with employees. With employees, we should expect the numbers to not be as good. I would just be interested to know what the average is for HB!
Employees are a numbers game. The more you have the more money you will make. One truck with you the owner working on it can make $100,000 a year, give or take depending on your area. Ad an employee to work with you and you can bump that up to $160,000 a year give or take a little. Send a employee on there own truck and they will hopefully generate around $75,000 a year. Lets say out of that $75,000 you could take home 35% of that you would make $26,250 a year off of that van. It would take about 2 to 3 vans for you to be taking home the same amount as you did with your first van working by yourself. The great thing about employees is that they did the work not you. Employees are worth it, you need them to grow. Are business is one of the best businesses to run employees in because are overhead is so low. When I was running employees i was making more like 50% off of a truck.
I am reluctant to do so, but I think I’m going to hire someone with experience. I don’t like the idea of an employee bringing bad habits with them but I don’t really have time to play around. I need someone quick. The nice thing about adding additional trucks is that your expenses won’t necessary double as you won’t be doubling your advertising and other fixed expenses. I’m going to go with Ammond Childs compensation strategy; pay based on percentage. I like the idea of the employee feeling more inclined to upsale stain protector on every job. I don’t sell much at all currently and if my guy can sell it on 25% of jobs then that alone will be over half of my expense to pay him.
@dirtbag wrote:
Hey Ron
Go big or go home! I like it!So at 400k your goal was to be at what dollar volume?
Now at 2 large, how big do you plan on getting? 100k/month?
We saw a slight decrease in ’07. The real estate market has slowed things down this last year. This year we expect to do around 230k
This year we expect to do around 230k
Impressive Ron. Good for you.
I’ll race yah.
Employees are scary but necessary if you want a business and not a job. I don’t want to have a job in 5 years. Where would the head office be without employees. The profit margin does go down because lets face it no one is a good has the owner. A low hourly rate is good plus commission so they get a little for doing stuff that does needs to be done but doesn’t make you money. I paid 31k in employees in 07 and it was worth it by myself I could’ve of come close to the 100k. I am in the middle of tracking all of these numbers and will report when I feel that they are accurate.
We have several pay schedules. In Long Beach, where our business is establised, I pay my two lead guys a regular weekly salary + commission regardless of the hours they work. In Ogden (started 11/07) I have two part-time helpers and pay them by the hour. If they are helping me with marketing, phones, flyers, etc. I pay them $8/hr. If they are doing actual carpet cleaning jobs, I pay them $15/hr.
My profit margin has gone down since our expansion, however, I work mainly out of our home doing more admin work and spend more time with my three kids (I mean two, one is my husband):
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