...those Employees

Jon F

DoubleA,

..After re-reading both of our posts, I want to clarify, I am not at all suggesting his plan doesnt'/won't work, just that the margin will go down, and it seems that the number by which it goes down would need to be dynamic based upon factors in the company, and I wonder if he has a system in place already to compensate for those factors.

You guys are great. Seriously. What an awsome site! Where else could you go and discuss this with someone that actually cares??LOL

donb1959

My employees know what my salary is, what they don't know nor need to know is what I charged for the job, or my net profit.

Two scenarios:
1. The information you are allowing your employees to be privy to is trictly "need to know". If one of them were to go to your competetor (an employee thats been with you for a while), he would know basicly how you are pricing jobs, and moreover how much profit you're making from those jobs. What my mark-up is, how I arrive at qoutes, and my profit are all essential/sensitive aspects of my business. So, if one or more of my employees feels like taking that to my competetion it could very well have a negitive impact on my business.

2. The employees know exactly what you made on a given job, and job after job you are making an excellant profit. They may not say so, but employees will be employees, and no matter how good you treat them, it will inevitably come around in discussions amongst themselves about how they are doing all the work while you make all the money, we should ask for a raise, what would he do without us, it's just human nature.

Yes, they may be interested to know how we did on this job or that, but is that detrimental at all to your business?

Yes, their well being is closely tied to the well being of the company, I agree, but as long as they know that we have plenty of work and that they will continue to be fairly treated, and compensated, I can't see how knowing the books could further their well being.

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George Z

Interesting replies and questions.
-The more employees the less overhead per man hour.
-We are within our margins most of the time as there is too much at stake for both sides.
-If a job takes longer it is mostly an estimating problem. Employees would be silly to take a pay cut. For that reason, the wages are guaranteed.
When that happens the margins don't hapen but it's rare lately. Besides, increase in production capacity
makes us go through more jobs with the same number of employees.
The 50% job costs cover wages, materials, burden, and now benefits.
The key is obviously pricing and increased production rates.
Basic Health Care is free here, so supplemental benefits are not as expensive.

Some open book information:
Yes, five employees, me included and four painters now.
No I am not the job super, I don't visit most jobsites. Management only.
Books are done by my wife in Quickbooks, she is a painter and gets a salary for doing books.
Payroll service through Quickbooks works like a charm.
I do most of the sales and estimating.
Leads? we can't keep up with them, marketing is currently less than 5%
Working from home, you are correct.
Training a remote secretary using PC Anywhere and call forwarding.
The most telling numbers:
Projected sales this year 360,000 with only three painters an apprentice and some small part time help.
Net profit and my salary should hit about $90,000 (no painting)
Dynamic, static? as long as the 50% margin happens.
We have the capacity to add couple more people as we are.
After that, more management is required, you are right.
But I am in no hurry, we have to build the company culture as we go.

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George Z

"The employees know exactly what you made on a given job, and job after job you are making an excellant profit. They may not say so, but employees will be employees, and no matter how good you treat them, it will inevitably come around in discussions amongst themselves about how they are doing all the work while you make all the money, we should ask for a raise, what would he do without us, it's just human nature."

They can have the raise they want by finishing jobs quicker.
If the company's 50% happens the rest is theirs.
If they leave they get a pay cut, they are welcome to.
You have to price jobs well and don't adjust your pricing to the improved production rates
and see what happens to their wages.

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George Z

"The information you are allowing your employees to be privy to is trictly "need to know". If one of them were to go to your competetor (an employee thats been with you for a while), he would know basicly how you are pricing jobs, and moreover how much profit you're making from those jobs. What my mark-up is, how I arrive at qoutes, and my profit are all essential/sensitive aspects of my business. So, if one or more of my employees feels like taking that to my competetion it could very well have a negitive impact on my business."

Don, I couldn't care less what competitors are charging.
There is only one right price for us: ours.
If the competition starts following solid business practices
because of them knowing how we run our business, great! we just raised the bar.

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George Z

It was nice meeting you too. You have a happening place going there, even the dogs seemed charged.
You are absolutely right! You treat your people right, it pays off.
If working for our company is the best place to be why would they go somewhere else.
And more than that, I love these guys and it shows.

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Stone Mountain

Great margins, George. wanna trade businesses?
I'll do plus or minus $1.4 million this year. If all goes well, I'll clear about $100,000.00. Of course, there were startups and burps and what not. (Although I've been in business for myself for 27 years, I walked out on my ex partner last year and started up literally from scratch all over again. He was extremely difficult to work with (and for: most of his crews have approached me for work) and I simply couldn't take it anymore.)
Steve

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