Crap! It might be time to finally expand.

[hausdok]

Hi All,

Well, it looks like I've finally got the business built up to the point where I either need to hire and train a second guy or I need to solidify a good referral pool of other local guys.

Yesterday I had to turn down six callers who's deadlines I couldn't accommodate; and I gave those folks the names and phone numbers or some of the brethren here.

The day before that I turned away five callers and there were probably about 10 over the previous weekend. By my reckoning, those inspections would have grossed between $9450 and $10,500 in revenue that's now lost. I know that one guy wouldn't have been able to handle them all anyway, but if he'd been able to handle half it still would have added significantly to the bottom line, so I really have to start considering this again.

The last time I was in this spot was in April of 2000 when I went off that roof. After that fall, the business got sucked into a black hole that I've been trying to climb out of ever since. Back then, I would take on two and sometimes three inspections a day, so I probably could have helped more than half of these folks; however, after that fall I'll normally only do one regular inspection a day and will fit in pre-offer consultations and other shorter limited inspections with the rest of my time.

To tell the truth, the whole idea of hiring another guy is kind of overwhelming to me; I really don't have the math, business or organizational skills to be able to deal with all of the crap that comes with employing somebody else; and, to do it properly, I'd probably have to add some kind of secretary as well. Right now, I just answer the calls and book on the fly and do the admin crap when I've got time. I'm sure that would have to change with an employee. In the end, I'm certain that I'll probably screw it up and end up in trouble with the feds or something. Still, having to turn people away is probably not the smartest thing to do so I've got to consider this.

Anyone else out there taken this leap recently? If so, I could use some pointers on how to avoid pitfalls.

ONE TEAM - ONE FIGHT!!!

Mike

[Scottpat]

I had that problem when I lived in Mississippi, 5 inspectors including myself kept each other booked a week to two weeks out. We simply referred the calls to each other, in no specific order. We all had similar work and inspection ethics. We all produced similar style reports and our fees were similar as well. Basically we were all pretty good friends and helped each other as best we could when called upon. We did not pay any referral fees for the calls, it all worked out in the wash over time. I bet that the 5 of us had about 75% of the inspection market in the areas we worked in.

[hausdok]

Hi Pat,

Yeah, I'd kind of considered some kind of a co-op setup where a bunch of us would have the same office person answering calls and doing the admin work for all of us and we'd all contribute equally to that person's pay and benefits. When the office person couldn't accommodate the client, the client could be fielded to the next available inspector.

The problem I see with it is that there'd have to be some kind of arrangement like what doctors and dentists use, when they have a single office person working for several of them, and it would be necessary to ensure that everyone is on the same sheet of music inspection-wise; so that, when the client doesn't get the service expected from the inspector that was first called, the client is sure to get the same kind of service from the second inspector called.

Tricky stuff. It needs to be hammered out down to the last detail or I think you'd end up with old friends turning into enemies.

ONE TEAM - ONE FIGHT!!!

Mike

[ghentjr]

Well brother Mike, you could also consider a 50% uptick in your prices and live better with the lower amount of business. Once you make the move to a hireling you will sleep less sound and be committed to keeping him/her happy. Then there's what to do when things are slow. Big step. Keep us posted.

[Terence McCann]

Good place to be Mike! Glad to hear that business is good.

[hausdok]

Well brother Mike, you could also consider a 50% uptick in your prices and live better with the lower amount of business. Once you make the move to a hireling you will sleep less sound and be committed to keeping him/her happy. Then there's what to do when things are slow. Big step. Keep us posted.

Hi John,

I just raised my prices by $50 an inspection in July and most of my inspections in July and August, and to this point this month, were priced between $500 and $600 each, even after employer/military discounts. I'm pretty reasonably priced compared to some here but I'm expensive enough that most price shoppers looking for the Yugo-priced inspector run away. The majority of homes that I'm doing these days are in the 2500 to 3000 sf range; so I think that, based on the numbers that run away when they hear the price and the fact that I'm still getting calls from the yuppi/techie crowd, that I'm about where I need to be right now.

Yeah, I know, employees take a lot of extra work; that's why I've avoided hiring anyone for so long; hell, I'm losing sleep just contemplating all the crap I'd have to keep track of with an employee.

It's not like I've never managed folks before; hell, I ran a 130+ person staff of MP's and civilian employees on Ft. Carson when I was Provost Sergeant there, and I've managed numerous investigations offices and have guided the careers of lots of soldiers in my day. However, I've never had to deal with the payroll and taxes portion of the nut before; and my numbers skills are so poor that I can't even balance a checkbook. I have enough trouble keeping myself straight taxwise let alone have to try and deal with a bunch of government mandated requirements for withholdings. I just know that I'd screw it up.

OT - OF!!!

M.

[Tom Raymond]

Mike,

I can tell you from experience that parterships have a way of ending friendships. I know I'll never go that route again.

I'm thinking that your new licensing law would have guy's looking for ride alongs. Once you learn to screen them well you could pick up a few of those extra gigs with a grunt to do the heavy lifting, and shape the new inspectors into good little soldiers that do good work and charge appropriate fees. Not quite O'Handley University, but a step in the right direction, and no new accounting.

Tom

[inspector57]

Well brother Mike, you could also consider a 50% uptick in your prices and live better with the lower amount of business. Once you make the move to a hireling you will sleep less sound and be committed to keeping him/her happy. Then there's what to do when things are slow. Big step. Keep us posted.

Mike, there is a lot of wisdom in this statement.

Why do you need to expand the business? If the answer is to avoid turning away the fees and put more on the bottom line, a simple increase in your price makes the law of supply and demand kick in and you make more money with less work.

If you just enjoy working long hours for less money, hire a staff. (they will get paid even if you don't)

Or raise your rates, work less an have time to donate yourself to the projects you choose.

Raising your rates will help raise the bar for other quality inspectors in your area more than hiring them.

[Jim Katen]

I agree with John. Use your pricing like a governer on an engine. Work smarter, not harder. An inspector employee will be nothing but trouble.

- Jim Katen, Oregon

[Jim Morrison]

Cousin Mike,

I've done it both ways with many small failures, and several moderate successes. I think it depends on your long term goals, but for most people, myself included: If you're turning away that much work, the market is telling you that you should raise your rates.

You can (not will) make more money with employees, but you WILL have more headaches.

Jimmy

[hausdok]

Thanks for your counsel everyone; it's greatly appreciated.

I've got lots to ponder.

OT - OF!!!

M.

[charlieb]

One more thought to ponder.

Back to the goal thing. As a one horse show, or two in your case, you work and save for retirement. When you expand and grow it is more of a business. I will take one of two directions in the next decade. I can perform EW and commercial work under a new company name and let the guys perform all the residential inspections. Eventually I may only run the business. The other option is to sell all or part of the residential side to one or more of the inspectors.

Either way I create passive income for the future.

It does not matter if you have 0 or 20 employees. There is always risk.

I outsource all accounting and payroll functions. Pay others for their knowledge.

By the way, I sleep very good at night. I trained my guys to my standard. We hold a monthly training session. WE parallel one another several times a month. Iron sharpens iron.

I already have more free time, a couple of other "concepts" I'm growing and enjoy a decent quality of life.

[kurt]

All good thoughts, no disagreements. I've had a thought.......

If you can find the right folks, employees are not a hassle. Let's say a young go getter like Dirks shows up; that could be a good opportunity for both of you. It's about finding and training the right people, and having systems in place that are duplicatable for consistent output.

Trickier, but not necessarily head ache-ier.

[Chad Fabry]

I had employees by the dozen in my previous life. The thought of going back to that lifestyle of paperwork, broken commitments and downright theft is giving me a facial twitch as I write.

That's a road I'll not likely drive ever again. Waiting for others to meet your expectations is like looking for water in the desert.

[Terence McCann]

I had employees by the dozen in my previous life. The thought of going back to that lifestyle of paperwork, broken commitments and downright theft is giving me a facial twitch as I write.

I thought being a mod at TIJ gave you that tic.

[AHI in AR]

Personally, while I have never had direct employees, I have had subcontractors who worked for me. Even without the headaches of payroll and tax paperwork, I became not only worn out, but absolutely certain that I was tired of being responsible for other people's work and behavior. As I see it, that's the crux of the problem. When you have a profession such as home inspection where the results are heavily dependent upon the abilities/talents of each individual inspector, you can't have consistent results from inspector to inspector... even with the same training. Ultimately, it could be argued that what's between the ears matters most, but personality and communication skills are also huge factors.

Is it more realistic to imagine making large sums of money with employees? Absolutely.

Does that mean you can sleep better at night? Not necessarily.

Based on your comments in this thread and what I can gather about your personality through your posts, I suspect you'd be better off following your gut and not bringing on employees. Let's face it: you don't deal well with folks who have, ummm, what I'll semi-delicately call less mental capacity than you have.

Raise your prices, enjoy not working any harder, bank the "excess" income, (note: expect higher taxes shortly) and set what you can aside for retirement.

[hmiller]

I also pondered hiring an employee and all of its' pluses and minuses. My problem is that I really enjoy what I do, and my business runs very smooth, with no real headaches. I have managed employees for other companies in the past, which can be stressful, time consuming, rife with trials and tribulations.

Having been an employee, like most of us have, it is easy to remember the mind set many of us once had. But after being self employed you develop an entirely different mind set.

While I have no problem when business is great one month, and slow the next. Income being like a roller coaster for us business owners, and the end of the year it all washes out. But employees expect a consistent paycheck at the end of every week. The concern is paying an employee for very little work in the slow months.

While I have no problem doing inspections at hours that are convienent for my clients schedule, and not necessarily for mine.... and I have no problem working 7 days a week. Many employees often want 9 to 5 hours, Monday-to- Friday.

I also feel that the kind of employee I would want to hire would be someone with experience in the field, and a motivated self starter that could provide a positive asset to the business. The reality is that kind of an employee, likely would be better off just opening their own business from an income standpoint (longterm). So what are the chances of finding the "right" employee that would be an asset, instead of a liability?

[charlieb]

I also feel that the kind of employee I would want to hire would be someone with experience in the field, and a motivated self starter that could provide a positive asset to the business. The reality is that kind of an employee, likely would be better off just opening their own business from an income standpoint (longterm). So what are the chances of finding the "right" employee that would be an asset, instead of a liability?

What are the chances? It all depends on the interview process and how they are managed.

How does any business grow? If your analysis were accurate, there would be no multi employee businesses that were successful.

The real questions is:

What are Mike's goals?

[qhinspect]

Raising prices only goes so far. Depending on his price now, he could raise his price too high that puts him out of the game.

The reason I say this is because I experienced it. I raised my prices to the point where I had to really sell my services. Instead of doing less jobs but making more or the same amount of money, I made less $ at the end of the month. While I only did this with clients that found my company through the phone book, internet or referred by a Realtor that normally doesn't use me, the numbers weren't good.

After I lowered my price so it was only a little more than before I raised it, I still have to work hard to sell my services (spend a lot more time on the phone), but I did get enough jobs. At this time I'm about $50.00 more than many in this area but I also include some services with that price (re-inspection and basic infrared scan) to get those jobs.

To sum it up, you can only go so far when it comes to raising your prices without experiencing a big drop in your monthly income.

Regarding the employee thing. I'm in the process of hiring a secretary and hopefully a home inspector in the spring. My wife and I are also starting another company working with lawyers (her specialty) so this will also bring in other income.

I also feel that if I can get two home inspectors and a secretary with a small office, all my goals when I started this business will be met.

I do feel hiring employees is going to the most difficult/scary thing I have done since wanting to be a home inspector and owning my own business. I just don't like the thought that if I get injured, income from my business would stop and everything I worked for might be in jeopardy.

Best advise, hang out with other business owners and get as much input as you can from them. They have and are going through the things you will be.