Pros and cons of hiring employees

[pdqdl]

Here are the biggest "pros" and "cons" in my opinion:

Pro: employees free you to manage your business. This can mean growth, independence, and financial security.

Con: employees REQUIRE you to manage them. This may be a skill that you do not have, and you may end up doing all the work in addition to attempting to manage your business.
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Me: I can't manage people worth a hoot, and I am barely managing to get by.

 

[komatsuvarna]

I can say I've done this a time or two. It's beneficial to keep a good crew employed even if your margin for profit goes down. Just so long as I'm not "buying" the work. :cool2:

Yes sir. Good help is HARD to find. If youve got some good guys, you better work them cause if you dont, someone else will.

 

[TreeAce]

I think to be alittle more specific.... A good climber,bucket op...crew leader...free's u up to do more and THAT person makes u $$$.Kinda. But that person OR you..needs help. Atleast I do. I need a guy on the ground who can use a saw safely and run ropes and I need ATLEAST one more guy to drag n chip. Soooo...I dont think the question here is really about whether or not to hire...its should I put people on the books or not. In my experience its not possible to run a tree service alone. I have actually tried it and its unsafe and completely unproductive. Few HO are ok with someone taking 2 days to do what should be done in a half a day.

 

[TreeClimber57]

Here are the biggest "pros" and "cons" in my opinion:

Pro: employees free you to manage your business. This can mean growth, independence, and financial security.

Con: employees REQUIRE you to manage them. This may be a skill that you do not have, and you may end up doing all the work in addition to attempting to manage your business.
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:agree2:

 

[Slvrmple72]

I am starting to wonder if anyone in my area actually runs there company truely "by the book". I am starting to think its not possible. When I start pushing numbers....dont look good. I have seen to many other companies bids over the years and there is NO WAY they are paying WC. Although there have been some cases where a bigger company that I am sure is legit is awful cheap to so i dont get it.....

In a word: VOLUME

In two words: CASH DEAL

 

[TreeClimber57]

In a word: VOLUME

In two words: CASH DEAL

Likely hit the nail on the head with those two words.. (well three in total )

 

[John Paul Sanborn]

Just had this conversation last night with a cpl members of this forum. Depending on what WC is in your state, you can figure anywhere between 1.5-2 times whatever your wage is to the employee to figure out what they're going to cost you. Simply put, it's ###### expensive

Most places actual "payroll cost" is around the wage + 30%, if that is what you mean by 1.5 x the wage, places like Cali, where W/C is 50% or more it will be stiffer.

For for payroll cost you need to figure all those hidden "taxes" mandated my the government, Unemployment, W/C, Payroll tax...Then there is all the bookkeeping involved, withholding....

Many guys go to employment services to manage payroll, not a temp service. You can get their people, or find one yourself and put him on their payroll. Then you just have to send a timesheet off to the company to get the check cut. I know guys who keep people on these services at near minimum wage, to cover the W/C and UIC mandates, then bonus them under the table to be competitive, cover for OT and any real bonus. It saves a headache, and you do not have to have a W/C policy.

The trick is to read all the fine print to ssee if there are any exclusions to what they will cover. One buddy/client got hit hard when he found out after the accident that the seasonal worker was not supposed to operate power tools, and he had to cover cor stitches from a mild chainsaw accident.

The thing is that if you fear growing, you will never do it. All you will have is a job with you as your boss. You do not get rich with tree work, but you can make a comfortable living running a couple of crews.

 

[John Paul Sanborn]

Yes sir. Good help is HARD to find. If youve got some good guys, you better work them cause if you dont, someone else will.

Many of my clients will get an ok worker, and hold on to them even though there is constant friction. only when you are constantly looking a new guy will you be able to find one that is a perfect fit. I call it "winnowing the chaff" or "panning for gold". During your peak operation time, budget extra payroll to have a temp on the job to search for the next great employee. If you find one better suited for your operation then those on the books, you can work one in as you work another out. "it's not that you're not good John, it's that your not good for me. Bob fits better on my team and I need to keep him." I have one buddy/client who farms these guys out to other companies until they find a good match.

many of the high volume, low price companies pay well for hard workers who show up regularly, no matter how much they kvetch and mess things up.

 

[brookpederson]

I know this is going to sound stupid, but do you have any family that wants to work in the tree industry. In minn you don'have to pay unemployment or worker comp for family members. It's saved my dad allot of $ over the years and now I'm in the same boat as you!

 

[lxt]

I think I brought up some of these points on the "regulation thread"??

It does seem as though its not possible to run a fully legit biz & I think this is why some want to regulate things??? you have to be smart with how you do things, hell just to be an LLC in my state costs you over $400 a year, no big deal...but then ad in all the other stuff, ISA certs, memberships, registration fees & many other operational expenses.

If you have equipment? compliance is the key!!! rolling down the road with bungee cords holding stuff down....tis a NO NO!!

the small biz owner who wants to legally hire is gonna lose money faster than he can make it....at first!! this is why most biz fold within the first few years!!

In my area, with all the "hacks"......you have to be business savy & smart in all facets of your biz..........sometimes I win & sometimes I lose by being a legitamate run biz................I mean hell....I cant work for what a couple of 24yr olds with a late model questionably legal truck with no insurance can!!

this is what you have to ask yourself? is it worth it? do I mind feast & famine? does my spouse have the ability to carry me through difficult times? is there enough obtainable work to justify employees? & on & on.

here I tell it like it is to potential customers, my competition is easily discredited!! yep they`re all insured............but, most are drug using, non certified, self taught, alcoholics with some form of criminal record!!! no matter how cheap Mr & Ms home owner are they dont want a thief or drug user working for them!!

In these times when our trade is being infiltrated by a bunch of layedoff, cashed in my 401k bought crap equip. know nothing about tree work types...........I have no quam about alerting the customer!!

pro`s........if you love this trade then do it right, no holds barred & go for it
con`s.......if this is too much for ya to handle..........then consider barber school.



LXT.................

 

[TreeAce]

In a word: VOLUME

In two words: CASH DEAL

I hear ya! problem is....all the volume and cash deals in the world wont help u when u have an injury (an employee) or the IRS decides it your turn for a closer look. I dont what law suit problems and I dont want them for any of my customers. If a guy cuts his leg bad or God for bid his hand is gone then there will be a sht storm of trouble. Plus I want to be able to hold on to good help and that means unemployment through the winter. Sometimes the whole thing seems overwhelming or atleast seems like the numbers wont work for me. I dont think I could have charged people more than what I have been. And I just didnt make all that much for myself in the end last year. Although I think that what JPS wrote seemed reassuring..wage plus 30% I can do! But I have been under the impression its atleast 50%. Some one earlier wrote ...10 an hour cost me 17.50 an hour...so if i wanna pay 15 n hour it will cost 26.25 ?! X3=78.75 an hour + all the other expensenses. And then I still gota make $ ?

 

[TreeClimber57]

I think I brought up some of these points on the "regulation thread"??.

It does seem as though its not possible to run a fully legit biz & I think this is why some want to regulate things??? you have to be smart with how you do things, hell just to be an LLC in my state costs you over $400 a year, no big deal...but then ad in all the other stuff, ISA certs, memberships, registration fees & many other operational expenses.

Ah yes.. that brings back memories.. and frankly there are a lot of reasons to not want regulation.. valid ones.. and some to want it. But those who are legit really do not care.. as it will not make a whole lot of difference in their operation. The ones impact the most are those who are not running legit operations.

You see at least in Canada.. you license your vehicle over 10,000 lbs.. red flag #1 goes up.. you register an company.. red flag # 2.. get a tax number and payroll #.. gee a couple of more.. a workers comp #.. yet another.

So you are all over the gov't radar at this point.. so you gotta run more or less legit 100% of the way. At that point a reasonable legislation makes no impact at all.

So.. what it came down to in that thread was the guys who were most opposed to it were the ones lacking some of the above.. or maybe in some cases most of it..

If you have equipment? compliance is the key!!! rolling down the road with bungee cords holding stuff down....tis a NO NO!!

the small biz owner who wants to legally hire is gonna lose money faster than he can make it....at first!! this is why most biz fold within the first few years!!.

Agreed!! Key is to keep out of debt as much as possible.. and roll with whatever comes your way.

pro`s........if you love this trade then do it right, no holds barred & go for it
con`s.......if this is too much for ya to handle..........then consider barber school.

Agreed!!

 

[John Paul Sanborn]

Family Members
Members of the employer's family may be considered employees, and they should be covered by workers' compensation in every instance where there is an employee/employer relationship for business related work.

Children, as well as spouses and related adults, should be covered. Family health
insurance policies may not extend to work related injuries, deaths, and diseases.
from: Ohio Workers' Compensation Law - OSU.edu

http://jfs.ohio.gov/ouc/uctax/rates.stm

The above link is the Ohio site for UI benefits and explains the shifting scale used for UI taxation. It looks like the first fiscal year in business you pay 3% of payroll for UI, then it is anywhere from 1-10%. I assume that the more you lay off employees, the more you pay into the fund. So if you are highly seasonal then you will be closer to the 10%. This is an assumption on my part, I did not read it too closely.


I looked around a little for actual costs of payroll tax, but could not find anything substantial. I think the employer pays around 10%, so fir a rough estimate;

05% ui
10% payroll
20% w/c
35% for "hidden" payroll costs.

 

[mpatch]

I hear ya! problem is....all the volume and cash deals in the world wont help u when u have an injury (an employee) or the IRS decides it your turn for a closer look. I dont what law suit problems and I dont want them for any of my customers. If a guy cuts his leg bad or God for bid his hand is gone then there will be a sht storm of trouble. Plus I want to be able to hold on to good help and that means unemployment through the winter. Sometimes the whole thing seems overwhelming or atleast seems like the numbers wont work for me. I dont think I could have charged people more than what I have been. And I just didnt make all that much for myself in the end last year. Although I think that what JPS wrote seemed reassuring..wage plus 30% I can do! But I have been under the impression its atleast 50%. Some one earlier wrote ...10 an hour cost me 17.50 an hour...so if i wanna pay 15 n hour it will cost 26.25 ?! X3=78.75 an hour + all the other expensenses. And then I still gota make $ ?

Dont forget that if you want to get and keep good empolyees you will have to offer some benefits such as paid holidays, vacation pay, health ins., paid training.

 

[TreeClimber57]

Dont forget that if you want to get and keep good empolyees you will have to offer some benefits such as paid holidays, vacation pay, health ins., paid training.

In Canada.. some of this is law.. you have no choice. Holidays are mandated, as are vacation (4% of earnings -- 6% after 10 years). Training is mandated - but some of it you can do in house if you have people (yourself even) who has passed test to be trainer. I have taken some of the trainer courses (Aerial Lift Certification is one for example that I have). Health Insurance is gov't covered here, but employer has to pay gov't percentage of payroll. Then there is unemployment insurance (or as our gov't has renamed it employment insurance), gov't pension plan and payroll taxes, and of course our favorite (workers comp - but ours is not as bad as some parts of the U.S. - litigation has not gotten to us as bad here so claims are not the same - hence rates not as high).

You see.. this is why we get upset with the guys running under the radar and doing sideline work without following rules. They are not supporting society, they are not contributing in any way at all... and are taking work away from those who are contributing fairly. They are nothing but leaches who are living on society.. and should be treated as such. They want everything they can get for free.. and they do not contribute their share in return.

 

[TreeClimber57]

05% ui
10% payroll
20% w/c
35% for "hidden" payroll costs.

Lets assume the above to be accurate.. what about:
.5% statutary holidays
4% vacation - or maybe even 6%
.5% - just a guess for training - tailgate meetings, etc.
we have gov't pension plan - maxes out at around $1800 year per employee.. for get percentage to get there.. but it is always paid by mid year .. so percentage is high enough.
our health insurance is low.. about .04% or something like that..

Guys do not realize it all adds up..

 

[TreeAce]

Lets assume the above to be accurate.. what about:
.5% statutary holidays
4% vacation - or maybe even 6%
.5% - just a guess for training - tailgate meetings, etc.
we have gov't pension plan - maxes out at around $1800 year per employee.. for get percentage to get there.. but it is always paid by mid year .. so percentage is high enough.
our health insurance is low.. about .04% or something like that..

Guys do not realize it all adds up..

Dude....baby steps bro...Most people would love to offer employees lots of extras but many here are just trying to get the basics going. Paid time off and health insurance are not the norm in my neck of the woods. ....If u work , u get paid. If u don't work, u don't get paid. Tends to be how it goes here. In all the "trades" atleast. Of course there are exceptions but not to many. I even have a cousin who is a union pipe layer and its that way for him. he does get a rather high wage but thats it. His union has some 401k stuff and it might be possible to get Health coverage but its very expensive.....Its not a pretty picture around Cleveland Ohio.

 

[TreeClimber57]

Dude....baby steps bro...Most people would love to offer employees lots of extras but many here are just trying to get the basics going. Paid time off and health insurance are not the norm in my neck of the woods. ....If u work , u get paid. If u don't work, u don't get paid. Tends to be how it goes here. In all the "trades" atleast. Of course there are exceptions but not to many. I even have a cousin who is a union pipe layer and its that way for him. he does get a rather high wage but thats it. His union has some 401k stuff and it might be possible to get Health coverage but its very expensive.....Its not a pretty picture around Cleveland Ohio.

Hey I hear you..

BUT.. in Canada.. which I realize is different.. if you put somebody on payroll it is ALL mandatory..

Which is why our things cost a little more than in the U.S..

 

[TreeClimber57]

I hear ya! problem is....all the volume and cash deals in the world wont help u when u have an injury (an employee) or the IRS decides it your turn for a closer look. I dont what law suit problems and I dont want them for any of my customers. If a guy cuts his leg bad or God for bid his hand is gone then there will be a sht storm of trouble. Plus I want to be able to hold on to good help and that means unemployment through the winter. Sometimes the whole thing seems overwhelming or atleast seems like the numbers wont work for me. I dont think I could have charged people more than what I have been. And I just didnt make all that much for myself in the end last year. Although I think that what JPS wrote seemed reassuring..wage plus 30% I can do! But I have been under the impression its atleast 50%. Some one earlier wrote ...10 an hour cost me 17.50 an hour...so if i wanna pay 15 n hour it will cost 26.25 ?! X3=78.75 an hour + all the other expensenses. And then I still gota make $ ?

I think wages + 30% is fairly accurate.. I added some numbers for our area.. but our WC is lower than what JPS posted.. so in end think it is likely same with extras. I don't want to post our WC.. folks may get jealous.. especially when I hear 50% in some parts.

 

[TreeAce]

Paid holidays and vaction time is mandatory in Canada? really?