Workers comp

[Mike L]

I may have an opportunity coming at me that would almost force me to expand my business, buy a second service truck, and hire an employee. I have zero experience with this. I’m very busy as a one man operation and I’ve considered this for a while but if this opportunity pans out I’ll most definitely need to hire help to make it work. I know nothing of having an employee, workers comp insurance, etc. I know a bunch of you guys have employee’s so can you throw me some knowledge and wisdom?

 

[Vetech63]

Unless you want a ton of headaches, keep things as they are. You will thank me later

 

[Junkyard]

It would take quite an opportunity and an excellent potential employee for me to consider. I’m a numbers guy, if I can’t make them work I won’t do it. As far as work Comp it’s essentially an insurance policy. It’s more expensive to start and as you gain an experience rating, don’t have claims and pay your bill on time it will go down slowly. Cost varies by industry, it’s a percentage of wages. Make a few calls and see what your rate might be. I wouldn’t be surprised to see in the high teens or low 20% range. Maybe even higher, I haven’t had it for several years.

Be honest about truck costs, hours billed, what you’d like profit to be etc. Unless it’s a fantastic opportunity I’d be surprised if you broke into double digit profit margins. Some businesses are just thin margins.

 

[Junkyard]

Might be better off to find a guy with his own setup and contract him? Keep a piece off the top for yourself?

 

[Mike L]

Yeah I’m open to different ideas. I was approached by the owner of several lumber mills across the state. I service the equipment at one of their mills and he made a point to find me and ask a few questions about my business. He asked if I worked at any of his other mills. I said no and he asked “ why not?” The he asked for some business cards and said I’d be hear from them. I’ve long thought that it would be much easier to stay a one man show but I don’t want to be ignorant about growing and I don’t want to pass up an opportunity that would be good for me. That’s why I’m asking questions. I’m not sure that it will even happen but if it does i want to know what I’m up against.

 

[Birken Vogt]

With questions of insurance, I have an agent for all of that. They figure out the details and also who is a good company to do business with and who is not.

 

[doublewide]

If you have a business sponsored retirement plan for yourself, like a SEP, you may be forced to make contributions to an employee plan as well, in amounts equal percentage wise to what your contribute for yourself.

 

[ianjoub]

A good man with a helper will make as much or more than a company with 15 employees. You need to break the 15 employee mark to make more money! At that point you can afford to have the extra truck and worker for no shows and breakdowns. You can have the extra person in the office for your no show secretary. You can afford the book keeper and accountant. You can afford the advertising to keep everyone busy.

Your mileage may vary.

 

[Truck Shop]

You will step into a whole other line of headaches. First ask your self why you went on your own. Going to work for someone like that
usually ends with them thinking they own you and your time belongs to them. Been there.

 

[CM1995]

WC is no big deal and not hard to figure or get a policy for. Our rate is 11% of gross wages for equipment operators which I think is high but that is another conversation.

What you might want to do is look into joining a local or state wide association that has it's on WC fund like your state Homebuilders Assoc. I know that sounds weird but some associations like the one in Alabama have their own WC funds and policies that may be cheaper than other options.

Mike only you know if it will pencil out and make you a profit. Personally I've owned a couple of companies and had many employees for over 25 years. Headaches, paperwork, taxes? Absolutely but if you want to grow and do more you can't do it by yourself.

One of the larger local mechanics here runs 3-4 service trucks with hired hands behind the wheel in addition to his shop mechanics and does very, very well. He stays so busy he charges close to Cat rates and stays booked wrenching on the quarry equipment in our limestone pits.

Only you can decide to branch out or not, my advice is to not let the insurance or paperwork be the deciding factor.

 

[John C.]

Another employee means an additional support person to do the paperwork. When I looked at it years ago that meant $40K a year in expenses with no chance of revenue on that bit of labor. My figuring was I needed another truck with at least a trainee helper I could bill for plus a lot of unpaid work on my part keeping things going.
My next thought was take a partner, all proceeds would flow through the business and pay would be based on shares in the business. Make the partner an officer in the business and avoid the state heath insurance, unemployment and other garbage that goes with employees.

 

[Zewnten]

Contractor under you with a stipulation they can't take customers or a helper at least to start. Every time I've seen a single proprietor hire someone and put them straight to work it's been a mess. That being said after pricing workman's comp in my state in killed off any desire for employees.

 

[crane operator]

I'm surprised some of your customers haven't already demanded you have a workmans comp policy, even though you don't have to have it being self employed, just to be on their jobsites. Most of the big companies by me demand it.

Workman's comp is just going to take a talk with your insurance agent, hopefully the same one that does your general liability. In my state, I don't actually purchase from a company, but through my agent, I purchase from a workmans comp pool company that is essentially state backed. Its kind of the only option in my state for small employers like me. Talk to a agent.

I wouldn't let the workmans comp hold you back. Like CM1995 says, it the only way to grow. And if it doesn't work out, it doesn't work out. You won't know unless you try. You can thank the new guy for his time and sell the second truck.

I would think a lot of jobs a second man would really help, and it would be easier to put out fires of those "emergency" jobs.

 

[Mike L]

Crane operator, a couple of the larger companies and my hometown who I do a little work for don’t require comp insurance on myself but I did have to provide a form from the state saying I don’t need it.

 

[Vetech63]

Here is what happened to me. I have tried to expand twice in my self employment career by adding employees and equipment........here is what I learned from the experience.

1. NO ONE will do the work as good as you. I don't care how much experience they have, you will constantly have to inspect everything they do to make sure YOUR reputation isn't getting damaged.
2. Now you have to be in BOSS mode. This means you deal with everything the employee is going through and you see it in their work. If they start having family issues....YOU are having family issues. You can try and tell them to leave that **** at home, it doesn't work.
3. The numbers for me never added to more net profit. Sure, the gross $ went up, but buy the time I had covered redo's (yes you will get them I guarantee it!) and the additional costs that went with it............I made less net profit than I did when I just worked alone.
4. I wouldn't want to even try and find a really good tech now days. Its going to be impossible......at least in this area.
5. Being in business is alot about the ability to deal with customers and their moods. If you are NOT a people person when dealing with them, you LOSE business. I don't know how many times a employee got sideways with a customer because of a poor attitude and that customer called me and basically demanded that employee not EVER be on his job again.
6. You have ZERO back-up when the employee is sick or hurt. Trying to keep a work schedule for your customers when this happens can be challenging.
7. Don't get me started about wage increases. They ALWAYS think they are worth more money than they are getting paid. They never see the cost of their screw ups nor the cost of just doing business itself.
8. Its not always about the money........to an employee it is.
9. Most will want some type of health coverage.........yeah, that's pretty much unaffordable now days.
10. Do what you want.........theres the old saying "Hope for the best, but expect the worse." Expect the worst daily.

I might be a bit jaded here, but I am not alone in these thoughts in my area as I have seen this numerous times, even with my own customers.

 

[ianjoub]

I might be a bit jaded here, but I am not alone in these thoughts

You are definitely jaded, but that is probably because people suck.

 

[Zewnten]

Vetech is saying the same thing I've always been told takes 2 great or 3 good employees to equal the amount of work you can do.

My question would be if you have management experience. A lot of good business operators and starters are terrible managers or bosses. They can't make the transition.

 

[Bluox]

You might check the mills insurance requirements.
I worked for a large timber company and their liability requirements were 2 mil for the woods and their mill side wanted 8 mil.
An old log trucker once told me I was doing alright with one truck so I bought another one hired a driver and shortly figured out I could go broke twice as fast.
If the mill has enough work to keep you busy see if he will put you on his payroll full time and rent them your truck.
Bob

 

[Mike L]

My question would be if you have management experience. A lot of good business operators and starters are terrible managers or bosses. They can't make the transition.

I have zero management experience which is another river to cross. There’s a very good chance I could be an a**hole to work for. However I wouldn’t ever know unless I tried it.

 

[grandpa]

CM, do you break out your WC hours such as your underground rate would be way higher than your operators? Maybe they are charging you for the underground work you do and not giving you a break when your above ground. Grandma does that for us. The insurance company kinda a balks at it but she holds their feet to the fire.
Every year when they come for the audit, she has the numbers all broke out on a percentage basis. They must trust her because they take her sheets and base it off that. She's actually doing their work for them, but at least they know we know what the true numbers are.