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Finder Fee commission/percentages??

Discussion in 'Commercial Snow Removal' started by michaelw76, Nov 13, 2012.

  1. michaelw76

    michaelw76 Junior Member
    Messages: 8

    What is a fair percentage to give a salesman/employee for getting new snow accounts?

    I was going to give him 5% of whatever accounts he brings in. Plus any new accounts that are generated from him or myself in his territory, he will get 5% of those as well. This 5% will be paid every year we have those accounts.

    Then I was going to put a brand new western 8.5 mvp plow on this truck and give him $40 to plow (with no experience), and also put his truck on my insurance/workers comp policy.

    I want this to be very fair and keep him motivated to keep getting more accounts.

    Is this fair and a good way to go about it?

    thank you,

    Mike
     
  2. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    Soooo, youre going to buy him a new plow, install it on his truck, hire him as an employee who has ZERO experience, cover all payroll taxes and insurance premiums, pay him five percent of all new accounts he AND you bring in, and then give him $40 an hour? Where do I sign up!!????
     
    Last edited: Nov 13, 2012
  3. Bossman 92

    Bossman 92 PlowSite.com Addict
    Messages: 1,771

    What if he brings you a driveway or a small law office? It sounds like you need to think about this a little bit. If I was guessing, I would say you hired a new guy and he's told you he can get you the snow contract for some lucritative account or something of that nature. Been there dealt with that. Just think about it long and hard before you set it up.
     
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Good deal for him,sucks for you.Can I put my truck on your policy,then I can use your insurance to go bar hoping! Brings you work means he'll make more plowing for you. I hope you have final approval on all bids going out too.
     
  5. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    I would say if you need to ask this question, you need to learn the stove is hot by touching it. This is a bad deal all around for you, and you as a business person should know that. This is a place to learn, as no one person knows it all. But there is no way this will work out in your favor. Maybe cut his pay by $20 and give him 10% of net on the accounts he brings in if he was proven. $40 is WAY too high for what you are describing, that and you are listing him on your liability knowing he has ZERO experience? What are you thinking!!!!!????
     
  6. michaelw76

    michaelw76 Junior Member
    Messages: 8

    Thanks a lot for the feedback guys.
    Just want to clarify that I will be putting the new 8.5 MVP on HIS brand new ram 2500 not on one of my trucks.
    So that is why I chose $40 per hour because it's his truck.

    He has also worked very hard at referring new accounts to me. A lot of these new accounts are owned or managed by some of his best friends so there is a lot of security with these accounts. The accounts he referred (I bid them because he doesn't know how to and I had control on the price) are very good quality accounts with good margins. These new accounts he's bringing in would keep 3 trucks/ 3 shovelers and 4 additional shovels for shovel only residential accounts (urban areas) busy each snow. So he cant do all of this work by himself, my other employees will be using our there equiptent to take care of the other routes. He will take on one route with a shoveler which is about 33% of the new accounts he brought in ( and still get a 5% commision the the other 66% of accounts). I think since he brought in so many good accounts and since he will be using his truck, $40 per hour with 5% commission is very fair.


    He also has 1 year experience running urban accounts with an 4 wheeler and shoveling crew. He would try plowing/cleanup accounts a handful of times with one of my trucks last year. So he has some experience just not a lot.
    Please let me know if that changes any of your responses.

    Thank you for the responses

    Mike
     
  7. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    I still think $40 and 5% is too much. I think $30 and 5% works considering how much you seem to like the guy. I really dont like your ins being liable for damage to his truck though....
     
  8. michaelw76

    michaelw76 Junior Member
    Messages: 8

    Thank you for your advise. Ok that sounds good. He is a very good loyal friend, and reliable worker. He learns very fast too. My insurance agent was the one who advised us to add him to our policy, just for liability reasons. I will really think a lot about what you said.
     
  9. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    Your ins agent makes commission too ya know ;-)
     
  10. Wilnip

    Wilnip Senior Member
    Messages: 583

    Business can ruin friendships. This is similar to having a partner. Everything is rosey now, but what happens when he screws up? maybe a DUI, divorce, arrested for kid touching, who knows.
    I'm kinda ok with the commission, but you seem way to generous. I would pay the commission one time, not ongoing. Like a $6k account gets him a $250 commission. I would not pay him commission, plus pay him to plow that lot.
    I'm not so ok with him on my insurance, unless he's covered under a subcontractor clause. I'm definitely not ok with giving him a brand new plow. I would lease it to him for $x.xx for x months. You can make those numbers whatever you want, but in the end, if he screws up, you have recourse to get the plow back. If you lease the plow to him, $40/hr seems more reasonable.
     
  11. 90plow

    90plow Senior Member
    Messages: 738

    You buy the plow he buys the mount. Give him his comission only after his friends pay you for the first bill. Give it to him for one year and then i would work on financing the plow to him via holding some of his pay. Let him get his own liability you can just back charge him workmans comp. Or just put him in one of your trucks and pay him like an employee sounds way easier to me.
     
  12. plowguy43

    plowguy43 PlowSite Fanatic
    Messages: 5,269

    You have you to pick one or the other - pay him well per hour, or give him a decent commission. Commission sales only work when there is incentive to sell and make your commission, if you have a nice safety net of a high hourly pay then why stress out about making a sale? If you get paid very little per hour, then you have a reason to make the sales since your income depends on it.
     
  13. leigh

    leigh PlowSite.com Addict
    from CT
    Messages: 1,997

    I'd give him the up front commision 5%.Then lower percentage rate each year accounts are retained.Buy the plow for his truck.Have him get his own commercial truck ins.Pay him the going rate for a sub, 60-70$ hr. Pay him say 30$ an hr and hold back the rest to pay off plow.He plows for 125 hrs plow is paid off,you've profited from his 125 hrs of plowing.Do only if he is really good friend.These deals don't alway's end pretty!
     
  14. greywynd

    greywynd PlowSite.com Addict
    Messages: 1,343

    I'd also be making him sign a non-compete contract too, as he could end up with his own equipment in short order, financed by you. If things do split, then cover your ass.
     
  15. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    This may vary state to state,but it is BIG TIME illegal to withhold earned pay for any reason, ANY REASON in the state of MA. You can be fined triple what the held back pay is plus attorneys fees. Def a huge no-no in MA.
     
  16. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    Yes sir, good idea
     
  17. 90plow

    90plow Senior Member
    Messages: 738

    When i say hold his pay take some of it as a financing deal that way hes only paying for the plow as he uses it. If hes trying to help the guy out.
     
  18. ducaticorse

    ducaticorse PlowSite.com Addict
    from we
    Messages: 1,426

    I sued the balls off of a former employer last year for holding back pay after I left the company, it was hella easy, and they ended up paying through their nose for what they did. I, as am employer will never ever **** with an employees pay. In this situation, I would write up a lease agreement with the plow and set up payments on pay day or the day after. That way you kno he's got the money, and you arent interfering with his actual paycheck.
     
  19. framer1901

    framer1901 Senior Member
    Messages: 813

    I personally don't think that's a bad deal for either of you.

    Commision on accounts over the life of the account while you are still together isn't unheard of. 5% isn't a bad number. You should have the percentage built in there anyways.

    Putting a plow that you retain ownership of on his truck isn't unheard of either. You are paying the guy 40 bucks a hour for his truck, his fuel and him. Subs in Chicago make what an hour normally, 60-80 bucks??

    Putting him under your business liability for while he is working for you is a must if he doesn't carry his own liability insurance. Requiring him to obtain his own liability insurance will cost more than what your insurance will to cover him - again, the 40 bucks/hr is low enough in your area to cover this added cost. Again, not an uncommon thing. This is more common than some may think, you are insuring an object you are leasing.

    Friends is friends but business is business - just write it out on paper what exactly is expected of each other, definetly some type of no compete and definetly an out that is agreeable to both of you. Write it out, when you both agree to what is written, have an attorney look at it and make sure it says legally what you mean, sign it and date it and have some fun.