Adding Employees

[Stacey K]

I'm sure you've already thought about streamlining your current processes to improve efficiency to avoid hiring someone? I'm the same size as you doing the type of work. I'm pulling my head out of water the last couple weeks from drowning since Spring. There are definitely areas I can improve in and become more efficient for the busy season. Estimating is one...taking way too long on larger jobs.

 

[TimToad]

I don't think that's correct at all. So to do $1 million you need 10 people? No. We will hit 1.2 probably, with 5 people here (6 for the first 5 months of the year.)

There are so many variables to any of this, it's impossible to zero in on any one figure or calculation.

Shop rate, wages, benefits, type of job duties, flexibility of each employee, work type, etc.. all weigh on just what any particular shop's ratio would be. A shop doing mostly banners and other low cost signs and limited diversity of employee roles might only be able to squeeze a lower amount of revenue per employee compared to a shop doing high value, more complex work with employees who can handle multiple tasks.

 

[Stacey K]

Another thing I've done is have someone do my weekly book work and general cleaning, organizing, etc. I do a lot of shirts and having my teenage sons weed the HTV and sort through boxes of shirts is a HUGE time saver. This allows me to do the work that is more difficult to train some random person off the street. Some weeks this has saved me 20 hours of work.

 

[ikarasu]

You guys say 100k gross a year....

Our employees make roughly 40-50,000 a year. Health/dental/insurance/ei/other benefits costs probably 10-15k per employee. So that's 50-65k net. Material cost... Other labor...machine ware and tear, etc... You're making almost nothing from said employee.

That said, there's other factors. The most important one is if it's worth it to you.


If this new employee will cut back the amount of time you're working and allow you to rest if you need it... Or free you up to focus on getting more work if that's what you want, even if you break even on the employee it's worth it.

Every shop is different, wages are different... Net vs gross is different... If a shop is netting 50% on 100,000 they can easily afford a new employee.... If a shop is netting $20,000 on 200,000 obviously they can't.

Look at your finances and ask yourself if you can afford to hire someone, and whether you'd rather the cash, or the free time.

I remember a thread back when I first started asking everyone if they regret going from a small 1-2 man shop to a large shop... Most people said yes, that the workload quadrupled while the profit increased only slightly due to all the employees they had to hire. Bigger isn't always better... If you're still taking in low paying jobs, you may find it cheaper to stop doing those than it'd be to hire someone else.

 

[Texas_Signmaker]

If you're still taking in low paying jobs, you may find it cheaper to stop doing those than it'd be to hire someone else.

100% correct on that. As my workload and calls increase, I pick better and better jobs and let the other stuff walk... Start cutting out the least profitable work

 

[Reveal1]

Or, raise your prices by 15%. Seriously, if for example you have sales of 500,000 and take out $150K as the owner, lose $100k of your least profitable business and increase net margin of the remaining 400K which is now $460K, you can now net around $159K with fewer headaches and room to grow. Or use $ to offer healthcare or profit-share to retain fewer/better employees who can simplify your life? You can argue with the specific numbers and % but the principle is the same assuming we all have areas where we charge too little and core customers who value what we do.