For all you business owners

[GQuigley67]

hi guys

Been thinking about some sort of investment into my business lately to expand, not sure if i really need to though. Was thinking private investors you can find online, anyone done anything similar?

I feel my business is going ok, since January 2016 my turnover has been £77k(declared income) I can offer finance on boilers, bathrooms and kitchens, although havent managed a sale on finance yet(need a good advertising campaign)

One week could be really busy then a week like this week quiet, luckily i cashed in alot of scrap and got £730 from that this week, also signed up for BG subby installs again(sigh)

So investment would be for advertising and maybe taking someone on, at the moment I use subbies but would like my own team.

Any help or tips would be appreciated!

 

[mfgs]

Its a difficult one, I have had a full time subby (well a few different ones, but only one at a time) working for me full time for the past 3 years. The thought of taking someone on properly scares me, it seems like a lot of extra expense and I haven't been brave enough to make the move. Not helped by the fact I am trying to buy my first house at the moment so want to take as few risks as possible.

To me it seems really difficult for a small business employing 2-3 people to be profitable. I am sure if I employ someone I will earn less with them working for me than I am at the moment. I'm just not sure what the answer is other than just going for it and hoping it all works out. Has anyone on here who employs people got an accurate kind of expense to expect from employing one member of staff?

 

[jtsplumbing]

If you could find an investor don't for get they will want a return on there money, and that could be more costly than employing someone

 

[cr0ft]

Its a difficult one, I have had a full time subby (well a few different ones, but only one at a time) working for me full time for the past 3 years. The thought of taking someone on properly scares me, it seems like a lot of extra expense and I haven't been brave enough to make the move. Not helped by the fact I am trying to buy my first house at the moment so want to take as few risks as possible.

To me it seems really difficult for a small business employing 2-3 people to be profitable. I am sure if I employ someone I will earn less with them working for me than I am at the moment. I'm just not sure what the answer is other than just going for it and hoping it all works out. Has anyone on here who employs people got an accurate kind of expense to expect from employing one member of staff?

2015/16 - Turnover (Excluding VAT) £194k, net profit after corporation tax paid was £26k. That was after all the salaries etc came out. I paid myself a £10k salary that year so effectively I see me having earned £36k. In that year I also bought a pre-registered Renault Master outright. This was based on myself and one other lad in the business, i.e. 2 vans.

2016/17 - Turnover (Excluding VAT) £217k, net profit after corporation tax paid was £43k. In that year we also started paying £8k a year in rent plus spent around £10k setting up our business premises the way we wanted to. This wage was based on myself and 2 others throughout the year, i.e. 3 vans.

We've made the money on profit on materials largely, as you say, it's hard to make money in the domestic market from employees. Customers never want to pay the right amount for the job and employees always want more. As the boss you are squeezed in the middle!

 

[mfgs]

Thanks for the input cr0ft, you always offer valuable information when it comes to the business side of things. Do you mind me asking what you pay your fully qualified guys? Also how much extra it costs you per year in terms of van, insurance, pensions etc so all the added expenses on top of their wage. Feel free to PM me if you don't want to put it on here.

 

[cr0ft]

To be honest with you the only fully qualified lad I took on was a disaster really. Really capable lad with a crap attitude. I've always had better results with taking young lads on and training them up from scratch to do things my way. There are lots of grants available to businesses doing this and it's a lot less risky to be honest. You don't want to end up with a rubbish employee who is costing you £25k ish a year in a 2 person business.

As soon as the lads are comfortable with the full range of plumbing jobs up to half a day or so long they get their own van and go out and start earning money. I know this is a bit unusual, but it has worked well for me. In return, they get a very good wage for a 2nd year apprentice. Unfortunately with minimum wage as it is now, they have to be able to run a van and do small plumbing jobs on their own in their second year.

The secret is finding the best lads from the local college. Never had much luck interviewing people who write to me direct. The local college is always keen to find apprenticeships for the best people on their level 1 course. They always pass us their top 3 when we ask.

The lads pay starts on apprentice rate and as soon as they are out in their own van doing small jobs they get £7 an hour, is usually as soon as their 2nd year. As I see them improving their speed their pay goes up. Top rate I'd pay for a decent plumber is around £12 an hour. Hard to earn more than that with a small company I'd say.

Based on that someone is earning £96 a day employed, let's call it £100 round.

You need to be working on the 1/3 rule (at least that's what I call it). From what you are charging them out at, 1/3 of that covers staff wages, 1/3 covers business running costs and 1/3 is profit for you. That's how I work and as you can see I'm not becoming a millionaire.

Some people on here will call you tight for working this way, but as we all know there are loads of costs of employing a plumber, providing a van, tools etc, insurance, uniforms, annual leave etc. that's what the 1/3 covering business running costs is for. Don't forget the hidden costs, time sorting payroll out and all the time you will spend quoting for work to fill a second 40hr rota each week..

When you take on someone else it's even more important that you're marking up materials etc by 30%. Also, the big thing I didn't realise, how do you ensure you are charging out all the stock used on the second van?? We developed specialist software for doing this as you don't want to be giving away stock for free because of poor administration.

Finally, beware. It's an easy business to support one person full time in. It's much, much harder to support 2 people full time, and this can be due to circumstances outwith your control. Since the Brexit vote our business turnover halved overnight as I expected it would. All the bathrooms and kitchens have gone which meant getting rid of one person. An easier decision than it could have been as he was the trained tradesperson with a crap attitude. Wouldn't have been so easy if he was a good worker though.