When should I hire another employee??

[MikePowers321]

Yeah, but I don't want the business to grow!! I want to keep it to a small one crew company. I am really profitable right now with just me and another guy. Hiring another person would allow me more time to do a few other things. It is stepping stones. I want to hire another guy and leave by 2. Then in a few years hire a super-star that can run the job and then I will leave at 10. The problem is I REALLY enjoy the working part of tree work. I always have. I am a production arborist that enjoyed climbing, running a bucket, operating the dingo, and pruning trees!

I believe you have just solved all your problems with this one paragraph.

 

[climbhightree]

NO, NO, NO!! You are not free. You're the most expensive person out there.

You can still be the guy in the saddle or running whatever piece of equipment you want. But there is a cost to that. What you could do is hire someone to do the administration to relieve you of that burden. For your businesses that's a P/T role. There are more qualified people out there that can handle all aspects of the admin, record keeping, bookkeeping, call management, tracking, renewals, etc... How many hours do you put into all that now? And I'm sure it's done poorly and begrudgingly at that! Even if you've got an understanding and skilled spouse doing it there's still is a cost. You could pay them as an employee and distribute your income across the two of you instead of just one. An accountant could help you figure out the best way to do that.

The other task you could off-load is sales. Hire a selling arborist, leaving you free of that task. Again, you need to be tracking your time when you're selling to see what that cost is. But that would free you up to focus on the production side and training your crew to develop them. Now instead of ending your day early to run off and rush through a appt you'll be able to add production capacity thus increase revenue.

Getting that piece of equipment then becomes another mouth to feed. By increasing your productivity (at a cost) you'll then have to increase the number of jobs to fill the extra time available and also to justify the cost. If all it does is shorten the day overall then what happens with the crew if you don't add more jobs to fill the day? If they're not getting their full hours you bet they'll be looking elsewhere.

Climbhigh, sure, once bitten, twice shy. Just learn from that experience what the problems were and develop your operation to address that. Others have gone down that road and have managed to make it work.

Whether you want a company of 1000s or 2, it's still a business to be run. Run it well and it will be prosperous for you.

I may not be free, but I'm sure am a lot cheaper, I'm like a employee you pay under the table (no workers comp or payroll taxes etc) which are a big part of a businesses expenses...and a better worker due to having more at stake. In my opinion it pays greatly to have a owner putting in billable hours.

My wife took over most of the office work; returning calls, setting up appts, payroll, books. All I do now is work and estimating. We basically doubled are gross since she took over that, and been booked 3 months out since spring of 2014. She is actually going part time after this school year (she is a teacher), so she can focus more on the business. I also have a pretty decent climber, and mini, so I am not showing up to apps beat tired. I like being on site majority of the time, cause I worked for a lot of these people for 16 years, and I don't want the quality to relax...back to I have more invested in the work being done.

 

[treehumper]

That's a great way to do it CHT. I'd only suggest tho that you put an hourly rate on your work so when it comes to selling the business when you retire the profits will be clear and it's easier to establish the value.

 

[NickfromWI]

Yeah, but I don't want the business to grow!!

Ok- you win. I'm not arguing with that. 3 years ago it was me and one other guy. Running the biz was WAY more fun and relaxing. I often dream about the good ol days! (though at that time we didn't have a chipper or a truck or more than 1 chainsaw, or clients or consistent cash flow, etc)

NO, NO, NO!! You are not free. You're the most expensive person out there.

Exactly.

Here's how I look at it: We typically do $2,000-$2,500/day. That means that I need to SELL $2,500/day to make that happen. True- a good climber, after factoring in workers comp and all that stuff can end up costing me $700/day or something...but that is a pittance compared to $2,500 I'm supposed to sell on that same day. If I work the job, I'm saving us $700, but costing us $2,500

Maybe I could sell and book like crazy, get a 1 month back log, then work the crew for 2 weeks, then build up the back log again. That would be a win-win!

love
nick

 

[ROYCE]

Ok- you win. I'm not arguing with that. 3 years ago it was me and one other guy. Running the biz was WAY more fun and relaxing. I often dream about the good ol days! (though at that time we didn't have a chipper or a truck or more than 1 chainsaw, or clients or consistent cash flow, etc)



Exactly.

Here's how I look at it: We typically do $2,000-$2,500/day. That means that I need to SELL $2,500/day to make that happen. True- a good climber, after factoring in workers comp and all that stuff can end up costing me $700/day or something...but that is a pittance compared to $2,500 I'm supposed to sell on that same day. If I work the job, I'm saving us $700, but costing us $2,500

Maybe I could sell and book like crazy, get a 1 month back log, then work the crew for 2 weeks, then build up the back log again. That would be a win-win!

love
nick

Your second statement is so true. Only when you have hired people you believe in and can do the work that you sell. I am woking towards that right now. I have opted for the path of training someone from the ground up. Around here there are NO certified arborist with degrees in arboriculture that are well rounded in there skill set. I am going to build one from within my company. I agree, if i could find someone like that I would pay them 30 an hour. But I might try and work with them for a few days a week to still have some fun!!

 

[treehumper]

Royce, kudos for your pioneering spirit!

 

[treehead32]

Ok- you win. I'm not arguing with that. 3 years ago it was me and one other guy. Running the biz was WAY more fun and relaxing. I often dream about the good ol days! (though at that time we didn't have a chipper or a truck or more than 1 chainsaw, or clients or consistent cash flow, etc)



Exactly.

Here's how I look at it: We typically do $2,000-$2,500/day. That means that I need to SELL $2,500/day to make that happen. True- a good climber, after factoring in workers comp and all that stuff can end up costing me $700/day or something...but that is a pittance compared to $2,500 I'm supposed to sell on that same day. If I work the job, I'm saving us $700, but costing us $2,500

Maybe I could sell and book like crazy, get a 1 month back log, then work the crew for 2 weeks, then build up the back log again. That would be a win-win!

love
nick

Nick- Are you doing $2,000 to $2,500 a day with yourself and 2 guys or a crew of 3? Is that trims or removals? Bucket or no bucket? I feel like I am pushing pretty hard to get $1500 a day done with 3 guys (1 man being the other owner on the ground) in an 8 hour day. Thats without a bucket. They climb but use the chipper and chip truck.

We made everyone employees last year and stopped the independent contractor. The workers comp, overtime...killed me last year. Definitely trickier with scheduling now and we only have one crew. What we did do is offer an incentive this season. I don't think they are milking hours (or they wouldnt be with us)..but our incentive was..you reach our goal of $1500 a day in 6 hours, I will still pay you for 8 hours. From my perspective its a win-win. They still get their full hours and for us, our daily revenue goal was met. With that being said, they spoke up and said "if we get a customer that asks us to come back out again because we missed a branch that was bugging them or the clean up wasnt what they hoped, we will do that on our time."

Any input on daily revenue would be appreciated.

 

[treehumper]

We made everyone employees last year and stopped the independent contractor. The workers comp, overtime...killed me last year. Definitely trickier with scheduling now and we only have one crew. What we did do is offer an incentive this season. I don't think they are milking hours (or they wouldnt be with us)..but our incentive was..you reach our goal of $1500 a day in 6 hours, I will still pay you for 8 hours. From my perspective its a win-win. They still get their full hours and for us, our daily revenue goal was met. With that being said, they spoke up and said "if we get a customer that asks us to come back out again because we missed a branch that was bugging them or the clean up wasnt what they hoped, we will do that on our time."

Good on you for making the jump. It puts the control of your business in your hands and there's no question about status of your workers.
I'm going to play devil's advocate on the other points. While the incentive is a great idea, I'm wondering what the incentive is to not take shortcuts or to work the other 2 hrs if they have the job done? Eg., They finish in 6 hrs what you thought would be an 8 hr job. At say 1 pm. a call came in for a small job around the corner on the way back to the shop that could easily be knocked out in the remaining time. What then? If they consistently produce in 6 hrs and you attempt to increase it how will that play out? Did you establish that figure because the crew was at max productivity? Will that number rise as you're able to sell more jobs? I see this as somewhat limiting or at the least creating some unintended consequences in the long haul. It may work with this particular crew but can it fly with a new member of the company?

As for the missed branch or clean up, were they saying they'd go back on their own time or were they asking you if that's the expectation? From a liability standpoint, they're still representing the company and therefore on your clock. If anything happened, from property damage, injury of a worker, or any of the multitude of ways things can go wrong they're on the company.

Incentives are tricky things. I've seen some pretty sophisticated ones be leveraged to the benefit of the employee while not serving the needs of the company and increasing the oversight on a daily basis. A bonus system can work but better yet compare wages to gross revenues to determine the amount of a raise. Say Revenues should be about 5-6 times wages for that crew. When they meet or exceed it then you can give them a raise to reflect that improved performance. It could be done on net revenues EBITDA (= Revenue – Expenses (excluding interest, taxes, depreciation and amortization) thus taking into account expenses the crew has some control over like, fuel consumption, equipment replacement, safety factors, etc.

 

[djm]

Jon- it depends on what you want to do. If you want to do the work. Hire people to do things you dont want to do. Ill never forget the week i hired and office manager. I was home at 3pm and my wife said " what are you doing home". Recently my manager got really pissed off dealing with something that i would have normally dealt with- i normally would have gotten pissed off with. I realized that i was on to something. I was paying him to deal with some of the headaches. All that being said. I miss the days i was in the field and it was simple. I dont miss the pressure of having to be there everyday. I have flexibility to be gone a week or 2 at a time and it functions without me. My goal is for it to function for 3 months, then annually without me. As i have gotten older i have realized time is the most precious commodity. I have done treework for 20 years. There are other things im interested in now. I want the time to do them.

 

[AmericanArborist]

Nick- Are you doing $2,000 to $2,500 a day with yourself and 2 guys or a crew of 3? Is that trims or removals? Bucket or no bucket? I feel like I am pushing pretty hard to get $1500 a day done with 3 guys (1 man being the other owner on the ground) in an 8 hour day. Thats without a bucket. They climb but use the chipper and chip truck.

We made everyone employees last year and stopped the independent contractor. The workers comp, overtime...killed me last year. Definitely trickier with scheduling now and we only have one crew. What we did do is offer an incentive this season. I don't think they are milking hours (or they wouldnt be with us)..but our incentive was..you reach our goal of $1500 a day in 6 hours, I will still pay you for 8 hours. From my perspective its a win-win. They still get their full hours and for us, our daily revenue goal was met. With that being said, they spoke up and said "if we get a customer that asks us to come back out again because we missed a branch that was bugging them or the clean up wasnt what they hoped, we will do that on our time."

Any input on daily revenue would be appreciated.

If my crew finishes a job in 6 hours I tell them here is another job to go do. Why not maximize your billable hours in a day versus paying wages that were never earned? I love selling 2-300 dollar jobs for that reason. Great filler jobs when we are in an area or when guys finish early.

 

[NickfromWI]

Our day starts at 7. That means the 8 hour day ends at 3:30. If the crew finishes early, they go home early, but not paid. If the job takes longer, they see it through and are on the clock that whole time. Honestly, we pay overtime on about 75% of our days. It just happens.

If you over estimate how long it will take to do the job and so the crew finishes faster and still gets paid for the full 8 hours, do you also NOT pay them for the extra time if you UNDER estimate and it ends up taking them 10 hours?

 

[ROYCE]

Well, I hired a guy. And I am glad I did. I went with my gut and it payed off. The new guy is great. I have found that now I can focus so much more of my time of getting brush to the ground and training. I also now have extra time at the end of the job to really spend talking with the customer, or neighbor, or doing something extra like chipping a brush pile or taking that small dead ugly tree down that we didn't talk about. Has been great!!! Now I just need to keep everyone busy. Lately that has not been a problem at all.

 

[NickfromWI]

I doubt you'll regret it.

 

[treehumper]

Royce, congratulations for taking the step! Now, you've pointed out the challenge you're going to face, keeping everyone busy. If you're the one doing the "extras" then it's still not the best use of your time. Selling and marketing is. Talking to the neighbor, dropping off flyers or putting up a lawn sign, getting on the phone to follow up on calls, would be a far better use of that time. Imagine, instead of doing a $50 extra, you land a $2500 job. Hmmmm.... You're far more valuable in that capacity. That extra time is when you need to be building the future work.
Dig your well before you're thristy!

Good luck!

 

[NickfromWI]

Exactly. $50 is chump change.


love
nick