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Big enough to hire employee?

Discussion in 'Business Fundamentals' started by farmertim, Aug 4, 2003.

  1. farmertim

    farmertim Member
    Messages: 95

    Hi Folks...
    I have been batting around the idea of adding a driver to my snowplow route.
    I'm at the point where it would be nice but...
    Is there any rule of thumb as to income verses adding an employee verses expansion to pay for one.
    I have the equipment, and can get more drives to defer costs, that is if I can find someone who wants to work, and will actually show up when needed.
    Any ideas would be helpful
  2. CT18fireman

    CT18fireman Banned
    Messages: 2,133

    The hardest part is going to be finding someone reliable, with the knowledge or ability and will take a reasonable wage. Also keep in mind this may be a second job for someone so they may not be available at all times.
  3. ChicagoSnow

    ChicagoSnow Senior Member
    Messages: 229

    Fill their need first!

    What I mean is, you need to become a problem solver!

    Find a trustworthy person, ask them if they would like a secondary source of income????????

    They say yes............... then move forward.

    Be creative, your equipment........ possible guaranteed income stream based on a lower hourly rate but paid regardless of snowfall. This is where you, the business owner must do his homework to ensure you also have a positive contract income stream to offset your new plow driver's salary.

    Or help them purchase a plow truck of their own.................. there is nothing like pride of ownership!

    Help them with down payment?, loan in your name(your truck) carry installment loan?, withold monthly installments out of plow compensation package?, default............ truck is yours!

    There is much more consideration to be reviewed before doing the "above", but I have done all of the above+. It works!

    You need to create WIN/WIN situations, but remember you must ensure the prospect is awarded first (always), then you will be by default.

  4. szorno

    szorno Senior Member
    Messages: 308

    I like what Chicago says above. But lets take a little different tack. Find a buddy that you know has a good work ethic. IMO that is the most important ingredient. Then figure out a way to expand your client list to use him. Then talk to him about a job as a sub, encouraging the pride of wonership. Maybe help him get a plow if he has a truck. I recommend heavily against co-signing. I ate most of a plow one time long ago. Set it up so you start him a little low, and give him a raise after a period. I give my new guys a dependability raise at Christmas if they plowed every storm. Make sure you train him. Then try to ride a bit with him and coach him. I trained 2 guys at the same time 2 years ago. One I coached by riding with him and guiding him. One I did not. The coached guy is my #1 non-family driver this year.
    Good Luck:waving:
  5. wyldman

    wyldman Member
    Messages: 3,265

    If you already have the equipment,you just need the driver.

    I wouldn't recommend friends or family as it can be difficult.Sometimes they don't like to listen.They will also expect you to take it easy on them,as they are a friend.The friendship will go out the window real quick at 2am in a snowstorm.

    Good pay,and incentives will help keep an employee interested.Part time snow work is a difficult job,as they only have to work when it's miserable,not when they want to.Being able to take then truck home to do their own driveway,or splitting cash jobs 50/50 with them may help.I have some drivers that make almost as much as some subs,yet they get to drive my truck.These guys know they make good money,so they hustle,do good work,and make me back 5 times what I pay them.

    Guaranteed seasonal pay is another way,as they get a set amount for the whole season,whether they plow or not.This sum will seem much larger to them,instead of $XX per hour,and they will be motivated to work hard.Bonuses and overtime can add to that figure.You can use a holdback,or charge them if they don't show up.I will take $500.00 out of their seasonal pay if they miss a snow event,as that is what it costs me to hire a sub to cover for them.Very few don't show up.You will need seasonal contracts,or some sort of guaranteed work to make this pay off though.I wouldn't do it on a per-push basis.To risky.

    Sometimes little things will help too_Offering to buy a pair of snow boots,or a good coat to someone who may want to do it,but isn't prepared in that way.At least they know they will be comfortable,and not cold.

    Try hitting a few landscaping companies who don't do a lot of snow,or find a summer seasonal business,as they will have a lot of guys looking for work in the winter.

    For the financial end of it,you'll at least need to cover the cost of your second truck,plow,insurance,repairs,etc,and have enough left over to pay your driver and profit a few $$$.If you can at least cover everything,then go for it.Cash jobs,extra work,and one time calls will help make a few extra bucks too_Once you have the truck and driver set up,you can always add more work to make it more profitable.Subbing the truck out part time to other companies can help pay for it too,if you have a slow winter.
  6. Chief Plow

    Chief Plow Senior Member
    Messages: 201

    Experience, experience,experience...... You need to find someone with alot of this... It really pays off believe me. I have been burned before. Good pay is another way, but that depends on your market and bus. situation. I would tend to stay away from friends, I don't like mixing business and pleasure. It seems to never work. Good luck

  7. Plow Babe

    Plow Babe Senior Member
    Messages: 218

    Regarding the actual payroll expense for having an employee, you will need to factor in taxes and insurance on top of the actual wage. Some figures are standard, and others will vary from one company to the next and from one state to the next, but to use ourselves as an example, here is the list of payroll overhead:

    Taxes: FICA, Medicare, Federal Unemployment, and State Unemployment

    Insurance: Workman's comp and General Liability, both of which have the premiums figured based on your gross payroll amount.

    Adding all this up, we have an overhead of 25%. So, if we pay someone $20 per hour, it will actually cost us $25 per hour.
  8. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Adding to PlowBabe's line of thinking, if that guy is paid $20.00 per hour, and your loaded costs is then $25.00 (25%), you need to add your overhead recovery and profit expectation. Assuming your equipment costs are built into your overhead, assume your Gross Margin is 65%. That means you need to make $71.42 per hour the guy is working for you to cover your equipment, overhead, his salary and make a 20% ish profit. I like to add a risk factor on top of that of 25%, so you're at $95.23 per hour. This isn't unreasonable to recover. In fact, most guys, depending the market, will shoot for between $100 and $150 an hour per truck.

    I used to find on residential routes that I was able to book a truck for between $10,000 and $14,000 at a minimum for the season. If I figured 5 hour routes on average, with 20 plows, that's 100 hours. Add in a little vehicle maintenance, filling up the gas tank, etc., essentially nonproductive time, and we averaged around $100 to $125 an hour.

    It may be that you're not completely ready to have another guy based on your current client list. Bring 'em on, give yourself the extra capacity. Until you fill it you'll be working fewer hours - but more than likely, the added back up you'll have combined with your good service will help you to build a reputation that will in no time at all yield more than enough work to fill your capacity.

    The key is not overbooking/over committing and keeping snow plow customers satisfied. I don't know about all markets, but my impression locally is that if you're good, there is more than enough work to go around...
  9. NoStockBikes!!

    NoStockBikes!! Senior Member
    Messages: 215

    Re: Fill their need first!

    Man, I wonder how many plow jobs I've passed up over the years thinking it was gonna be an Amway pitch. :cool:

    ROSELAWN Member
    Messages: 78

    One type of seasonal employee I have found that works out well for me, and them, is equipment operators ( excavating). Basically they know how to move material efficiently, dirt, because that is what has to be done for their boss in the summertime and I find that carries on into the snow removal sector as well. Also, when it snows they are off. It seems they are very willing for extra money as the holiday season is costly for all people. As far as reliability, they spend summer in a hot, dusty, bouncy, loud machine....a truck with heat, am/fm and smooth pavement is a welcome release.:drinkup:
    Last edited: Sep 18, 2003