Adding Employees

[equippaint]

In a small shop with basic vinyl signs, vehicle lettering, no big installs, no wraps and no electrical. What do you feel would be a min/max revenue amount per employee to use as a basis of when another person needs to be hired? How much can 1 good person produce at a maximum sustainable level?

 

[billsines]

That's a good question...not sure I can help you out from a revenue standpoint...What is your current workload/backlog? I mean, if you're working 90 hrs a week just to stay on top, then by all means, spend the money to hire. Other consideration: how big do you want to get? Are you wanting to add additional services? In short, I would prefer to be super busy then hire, rather than hire, then try to keep the person busy. Revenue never played a part in our hiring; only backlog size.

 

[equippaint]

That's a good question...not sure I can help you out from a revenue standpoint...What is your current workload/backlog? I mean, if you're working 90 hrs a week just to stay on top, then by all means, spend the money to hire. Other consideration: how big do you want to get? Are you wanting to add additional services? In short, I would prefer to be super busy then hire, rather than hire, then try to keep the person busy. Revenue never played a part in our hiring; only backlog size.

I'm the same way and prefer to work more than hire. I can usually keep up but lately have been struggling having any flexibility to do anything but this. Im wondering if it is just me though because I get bogged down during the day with obligations in our other business. Im trying to figure out if I hired someone could they keep up with no help or is it not enough to keep them busy. Sounds stupid I know. No significant growth plans are on the radar either.

 

[billsines]

Well, since you have another business, it sounds like this person would have to be pretty responsible and with a really good work ethic. I doubt paying someone like this hourly is going to get you the quality you will need. If it's big enough, maybe you could bring someone on and have them become part owner...then they would have skin in the game to make it go and work unsupervised if necessary. Not sure, just spitballing here.

 

[Texas_Signmaker]

I thought at one time someone mentioned 2.5x their salary

 

[mark galoob]

100k per ur per employee gross. Each employee should be able handle that number. Obviously it could be plus/minus. So if you are grossing 400 per yr. it should take around 4 employees to handle that

 

[Christian @ 2CT Media]

100k per ur per employee gross. Each employee should be able handle that number. Obviously it could be plus/minus. So if you are grossing 400 per yr. it should take around 4 employees to handle that

Wow, that's highly inefficient, we are at 1.4 with 6 total including two owners and only 3 are in production. We can probably handle twice that if we make some software/equipment changes.

 

[kcollinsdesign]

Everybody has a different business model. For the average commercial/electric sign shop that installs and services electric signs (paying union or prevailing wages) the number is probably closer to $250,000 per production employee (journeyman or equivalent). Office personel get paid less, and that comes out of overhead. Owners don't get paid unless they are out in the field doing the work. For a small commercial shop that pays lower wages ($10 - $25/ hr. limited benefits), with lower general liabilty and workmens comp premiums and much lower operating expenses, a figure of around $125,000 is probably more accurate. Specialty shops and artisans will have numbers all over the place.

Signs of the Times used to publish a "State of the Industry" report that surveyed this information. Not very useful, because every business is different, but at least it was a stick to measure by.

One guy I know who works by himself out of a small office/shop bills about $350,000 annually, and keeps around $100k before taxes. Most production and installation is out-sourced, but he does capture a significant part of his income by charging for design and project management.

 

[mark galoob]

Wow, that's highly inefficient, we are at 1.4 with 6 total including two owners and only 3 are in production. We can probably handle twice that if we make some software/equipment changes.

its not inefficient, it is standard in business. your business happens to be very efficient. i have a friend who does 400k by himself, and has to have his wife help him maybe a couple of weeks a year.

 

[Christian @ 2CT Media]

I would not even consider hiring at 100K per employee... I would raise my prices before hiring to cover that little margin.

 

[eahicks]

Are you asking monthly or yearly? I think it used to be $30k/mo sales per employee....a 5 man shop should be at $150k/month. Right now we are about that, but with 3 people (production/design combined) and customer service person. We are severely shorthanded and need a production person. And this is 95% in-house. We are slammed.

 

[Christian @ 2CT Media]

Are you asking monthly or yearly? I think it used to be $30k/mo sales per employee....a 5 man shop should be at $150k/month. Right now we are about that, but with 3 people (production/design combined) and customer service person. We are severely shorthanded and need a production person. And this is 95% in-house. We are slammed.

These numbers are more realistic for this type of industry.

 

[kcollinsdesign]

There is no standard model. You will get exponentially more production per employee in a highly automated production company doing large print runs than you will running a small commercial shop doing custom signs and one-offs. You will get more production out of a crew running an Elliot HiReach than one using ladders out of a pickup. Even though production per employee varies widely, what really matters is profit.

 

[ColorCrest]

100k per ur per employee gross. Each employee should be able handle that number. Obviously it could be plus/minus. So if you are grossing 400 per yr. it should take around 4 employees to handle that

Yes, this formula, and has been common for 20+ years.

 

[chester215]

I don't think equippaint can reply, looks like he has been banned.

 

[signage]

I don't think equippaint can reply, looks like he has been banned.

That's a shame

 

[eahicks]

"100k per ur per employee gross."Yes, this formula, and has been common for 20+ years.

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.)

 

[Christian @ 2CT Media]

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.)

No wonder why businesses fold up so often... $100k per person, I would just go work for someone else... That would be a cakewalk all day.

 

[ColorCrest]

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.)

You may not need 10 people to make $1 million but it’s still a rule of thumb and has been for a long time because wages have not changed enough to affect the ratio. It’s easy to find citation of the rule for small business via Google.

As for the sign industry, it’s not too difficult to glean the same ratio from researching top shops in the trade using their published staff size against their published or estimated revenue. Sources such as Wide-Format & Signage (Top-Shops, every year), LinkedIn, Indeed, Glass Door, Owler, etc. Sometimes extrapolation can be tricky due to smoke and mirrors but, if one has been around long enough, one can easily connect the dots of company name changes, mergers, acquisitions, etc.

Do you have a particular believe of what the ratio should be?

 

[Christian @ 2CT Media]

My target for efficiency sake is $1000/day for Production and 5x Salary for designers. If that can't be met it isn't worth hiring.

We are over that in production and in design.