Wade Palmer and family
With the summer months here and economy steadily bouncing back from the recession, inspections are ramping up and schedules are filling up fast. It may be time to think about bringing on a new hire, either to do some inspections or take up some of the administrative slack. Safely growing your business can, in some respects, be just as difficult as weathering the tough times. Wade Palmer, owner of the Central Oregon WIN Home Inspection franchise, knows that first hand. Palmer first purchased his franchise about ten years ago and has since brought on his wife to handle marketing and his son as a second inspector. Palmer has been around long enough to grow (and shrink and grow again) with the times. Here’s how he’s handled company growth.
Do the Math
During the busy months, it’s tempting to get burnt out, hastily decide to hire someone new and wind up regretting it months later. If you’re thinking about taking on an employee, you’ve got to be sure you can financially swing it says Palmer. Before bringing on his wife and son, Palmer did some serious calculations ahead of time to see how much business each new employee would need to bring in to keep the company financially stable.
“We decided that in order for my wife to leave [her former job], she would have to increase our bottom line by about five inspections a month to be able to make up the income,” he explains. “…She was able to do a lot more marketing than I was ever able to do as an inspector/owner. She was able to increase our numbers by way more than five per month.”
Having a specific goal in mind for a new employee, whether it’s a dollar figure or an increase in inspections, can help you as a business owner decide whether you can afford to take on a new hire.
Factor In Everything
If you take on a new hire, you’ll also be investing in a lot more than just a new salary. When Palmer hired his son, he not only added someone else to payroll, he also had to purchase equipment, a new company vehicle and additional tools before ever taking on a new inspection.
In addition to paying a new employee, you also may need to invest in additional workspace, uniforms, a new computer, taxes, worker’s compensation and company benefits and you’ll need to time to train them properly. For Palmer, factoring in all of the non-salary costs meant having to adjust what he planned on paying his son.
“[Originally] we thought ‘Well, we’ll pay him 60/40 [per inspection in his favor] and then after a couple of months we realized that it wasn’t enough to pay the bills,” he says, adding that offering an employee/employer split would provide incentives for the new employee to do more inspections. Palmer switched to a 60/40 split in favor of the employer for the first 20 inspections, then reverted to a 60/40 split in favor of his son.
To get a better ballpark figure of how much a new employee will actually cost with everything factored in, multiply the new employee’s salary by 2.5. That means that if you’re hiring a new inspector with a $40,000 per year salary, you’ll need to be ready to fork over $100,000 in additional costs (though how much you’ll actually need to pay will vary significantly from company to company).
Protect Yourself Legally
When eyeing new hires, keep in mind that your newest trainee could one day become your biggest competitor, particularly if you’re hiring another inspector says Palmer.
“When you hire somebody and they quit to do their own business, you have to be ready for that,” Wade says. “You have to have some sort of legal documentation in place like a non-compete clause for a year or two.”
Non-compete agreements are fast and easy to do—you can whip one up online right over here—and they can save you years of headaches down the road.