Am I too generous a boss?

NeptunesMoon

I run a small business providing a service as a sole trader. I charge my customers on time; a higher first hour fee that takes material, fuel and all other costs into account as well as the time tkaen to get to and from the job and then charge each hour after at 40eur or 60 if theres 2 guys. my prices include vat @ 13.5% and out of that, i'm paying each guy 12eur an hour. I use contractors and don't have any emloyees but am keeping it all above board, they give me invoices for all the money I pay them so its all traceable.

its a competitive market and my prices arent the highest but defintely not the lowest either and raising them at the moment probbaly isnt a good idea. i raised them recently actually so dont want to put them up again so soon.

the job requires no qualifications other than driving license for them to drive the van to and from the jobs. it can be tough work at times, but then other times its just sitting in traffic or driving to further distance jobs.

My main lad lives local enough so he drives here and as soon as he gets in my van his clock is ticking @12 an hour, he then collects one of the other lads depending on whose available, where they live and will drop them back at the end of the day too, this could add 30 minutes to the day and each of them are getting paid for it.

the thing is that some jobs can be short so i dont want to discourage lads from working with me if they are only getting 2 hours work and have to travel 1.5 hours to get to me and back, so 3.5 hours work for 24eur without a constant stream of work. I don't pay them for breaks and if I have more than one customer a day, ill try time it so they are going straight from one job to another, but some times the timing will be off and there will be a gap of a few hours between jobs which I dont pay for either, they can do what they want in this time.

my main lad actually offered to work for 10eur an hour with sundays time and a half before he started working for me, but then i said i pay 12eur an hour for all days including sunday, so i was paying him 12eur an hour from the start but then when I had a sunday job, he wanted 18 (not even the 10+half he originally said) which I refused and now he won't do sundays for 12 so i don't take any Sunday jobs now as its not worth it

so after i pay wages, im making 28eur an hour or 36 if theres two guys, out of which I need to pay the vat on the full price and all other expenses of the business. I've a decent amount of work coming in, but i'm by no means rolling in it and am actually at the point where im wondering is all the work and long hours worth it when self employed are getting screwed with tax and no benefits and I could be earning more working for somebody else. My business from the outside appears successful but my bank account does by no means reflect this.

I'm thinking that reducing the wage to 10eur won't make too much of a difference, with two lads it would mean paying an extra 40eur from 600 taken in for a 10 hour day, but maybe it would and maybe I should? Actually most guys are very happily surprised when I say I pay €12 an hour. Most of the guys I use I'd know so I'm kinda happy to pay them well, but they can also get tips on top, which I take none of, plus they aren't paying any expenses like I'm paying. I'd actually love to know the end price I end up with in my pocket, it may be even less than 12eur an hour after all my expenses!

have a good relationship with all the lads but just wondering when it comes too finances, am I being too generous?

mikemac1

NeptunesMoon wrote: »

my main lad actually offered to work for 10eur an hour with sundays time and a half before he started working for me, but then i said i pay 12eur an hour for all days including sunday, so i was paying him 12eur an hour from the start but then when I had a sunday job, he wanted 18 (not even the 10+half he originally said) which I refused and now he won't do sundays for 12 so i don't take any Sunday jobs now as its not worth it

Your main lad started with you and agreed to work Sundays and agreed to your higher offer of 12 euro per hour instead of 10 euro per hour and in return he wouldn't get time and a half on Sunday. A fair agreement between both of ye.

Now he's refusing to work Sundays unless he gets 18 per hour and he's costing you business. Even if the jobs you turn down on Sundays were just breaking even you can build up happy customers and they'll give you mid week work too maybe.

Anyway I think the lad has broken an agreement here. If he signed up to a 9-5 Mon - Fri and you want him Sundays then yeah, overtime is fair. But he took your higher rate and now he's refusing to work for you.

He knew at the start that Sunday work was a possibility. You are not pulling office staff here and demanding they work Sundays suddenly. The guy knew it, he knew there were jobs on so he can't now say he doesn't want it

I'm not saying get rid of him but you should approach him, explain he is costing both of you work and if he won't do the Sunday work he needs to go back to his original offer. If he refuses well it seems you will have no trouble getting a replacement.

NeptunesMoon

thanks for the reply! how that happened was i got his number off my mam, she used him and said he's a really honest and nice guy (he is!). I text him (I know I prob should have just called and met him), but it was nothing definite at the time and I just introduced myself and said if he'd be free for a few hours here and there. He text me back his rates 10 and sanday time and a half and I asked him to check an email I was going to send him for details including how I pay. He never charged me 10ph after this and was taking 12ph and then I had a job for him on a Sunday and his bill was hours x 18eur, I refused to pay 18 and told him he's only getting 12 and asked him did he not read the email that I explained all this in the email and he said he only scanned through it as it was long and missed the part about Sunday. He hasn't taken any Sunday work since.

mikemac1

99% of emails are junk. If I got an email about work and wages I'd read it multiple times and then read it again.

The guy knew the rates, he is just playing dumb with you.

I don't think it warrants getting rid of him, he's a good worker. But maybe go back to the original offer. He's getting the extra money but none of the downside of the lower Sunday rate, he sounds like a cute hoor :cool:

sh1tstirrer

Do you have any gals working with you?

Alan Shore

OP do these guys have other customers? They are self employed and drive your van? Are they registered for VAT. You pay them for driving time. They are employees on the face of it.

So out of the €12 they have to pay their own bills, provide their own insurance and tools as they are self employed.

You it appears are avoiding employers PRSI and holiday pay by calling them "contractors".

NeptunesMoon

sh1tstirrer wrote: »

Do you have any gals working with you?

how is this relevant?

Alan Shore wrote: »

OP do these guys have other customers? They are self employed and drive your van? Are they registered for VAT. You pay them for driving time. They are employees on the face of it.

So out of the €12 they have to pay their own bills, provide their own insurance and tools as they are self employed.

You it appears are avoiding employers PRSI and holiday pay by calling them "contractors".

yes, they have other customers. I've been over the employee/contractor issue with my accountant but it's still a contractor relationship. They aren't clearing the VAT reg threshold so not charging me VAT. They drive my van, use my tools etc, all I'm paying for is the labour. I'm a little confused on the insurance, should my insurance cover them or should I be insisting they have their own insurance (I guess all they need is their own public liability insurance, or maybe personal injury if they get injured too?), again, some guys I use have too few hours to go spend 300eur on an annual insurance policy just to do work for me so this could be tricky to insist on.

_Brian

Would it be an option to have someone do the back office stuff and you go out on the jobs yourself with one helper ??

Otherwise I'd be letting this guys services go and get someone else. Maybe the helper would step up to a more senior role.

NeptunesMoon

This guy has actually proven to be a pretty reliable and good worker with good initiative and I'd like to give him a chance as he's a good person and if he could improve on communication, punctuality and we can agree something on the Sunday work, it would be ideal.

sh1tstirrer

NeptunesMoon wrote: »

how is this relevant?

Guys 'n Gals :rolleyes:

Andrea B.

"a higher first hour fee that takes material, fuel and all other costs into account as well as the time tkaen to get to and from the job and then charge each hour after at 40eur"

Can you please share what business you are running, so we can get a better idea of what other overheads/losses you might have, because in the absence of more information, I see it as a win+win+win if you are paying €12p/h for mostly (what%) revenue earning time only?

If you are not seeing enough return from the business, based on your pay rates to contractors, I would recommend studying your model, efficiencies and overheads with a view to optimization.

As a simple example of what I mean, how much time each week is spent paying your team to have vans filled up with diesel. I would recommend you use a safe guide of at least 20mins per fill stop? You are paying these guy/s for this time, but may not be receiving revenue?

NeptunesMoon

Thanks for the input. I'm currently building the business and spending a lot, through new equipment, vehicles, website, communication costs, diesel and all the bits and pieces, as well as tax and vat. I'm not taking loans and have received no grants etc (unfortunately I wasn't really aware of grants and feel it's too late now), everything has been bought from the earnings saved but I really ate into my savings in 2014 and still am and will be in the first half of 2015 I think. 2016 should hopefully be far less spending and more earning, but besides all that, I'm thinking if €12 is still too much. Some jobs can be more driving than labour where the helper is free to fall asleep or do whatever in the passenger seat. Maybe I can just pay less for the helper for a start, but I'm wondering if I've shot myself in the foot offering €12 to everyone from the start, and now I'll seem greedy or mean by reducing it if I do.

Bandara

[/QUOTE] and now I'll seem greedy or mean by reducing it if I do.[/QUOTE]


So what. Your in business to make money. Peoples opinion of you is irrelevant especially in a situation where imo you are over paying them anyway

Inform them your rates are changing April 1st to €10 an hour. They have plenty of notice, if they wish to move on they will, you'll replace them easily and the business continues as before. If they stay that's good as well.

You just made the mistake of trying to involve the staff/ worry about the staff leaving too much, we've all done it !

Good luck

antoinolachtnai

I think you really need to look at your 'model' and make sure you can really make money here. You need to look at all your costs. You also need to price in being completely in line with employment law and health and safety requirements for your business.

12 euros does not seem a lot to hire a person on-spec to do this type of work and to look after their own expenses. If you cut the wages by 16 percent you will certainly end up with less quality or less availability.

If you cannot make money in the business then you should not invest more in it.

buck65

A good thread this, I can empathise with you as a SME owner myself. I have also made the mistake of being too nice at times to staff - it works at times and you can cajole a bit of extra work by being flexible but some people just see weakness and have invariably taken the piss.

In time I've had to take a harder line attitude by reducing wages 20% - the business was really on the cusp for a few years. Everyone took the medicine and some did leave but not too many as work is scarce around here.

Recently we employed a business coach to help us improve our game and I must say that it has proved invaluable to us. We do staff training/ meetings fairly regularly and our margin has improved by just looking at things like what we charge - how we do business really.

The guy we use works with lots of businesses and knows little enough about ours per se but he has proven that sound business fundamentals are easily enough transferable between sectors.

Perhaps thinking outside the box this way or even a mentor would help. I would be happy to answer any queries by PM or here for you.

PS business coaches ain't cheap but someone to help look at your business might put a bit of steel and urgency in you to do the things you know deep down you have to do. As Peter Drucker said the first principal of business is not to make money but to create a customer - you seem to have done that so making money should follow on.

pedronomix

driving your van, using your tools and you carry all insurance liabilities, whether you have actual cover in place or not!! These guys are employees, part-time/temporary whatever you want to call it. IMO, you are building a big problem for YOU, if it goes wrong, you are personally on the hook for everything. Ask your accountant if his advice carries a full cash guarantee!!

I have done similar work with a friend, almost thought you were him while I read the thread. Seems you and hiM pay same rate per hour, my day would start from minute I pick up his van, at one stage he tried to only pay me 10 per hour while on the road then 12 when I was doing the work.
It worked for a while but then jobs got bigger and I couldn't work full days For him, then he started trying to get me to split tips if I done six hours of a shift and someone replaced me for the last hour. I wouldn't agree on that nor the rate of 10 Euro per hour.
As we are friends and I didn't want to fall out so I only work for 12 Euro an hour and only when he is stuck :-)

DamienKelly

Its hard to offer deep advise without knowing the full details of the business. The first thing I would strongly suggest the minute you read this is pick up the phone and contact revenue and just explain the way you are operating the business in relation to the drivers I think you will find that if you received an audit revenue would tell you that these drivers are actually employees. You asked your accountant and he said you were doing everything correct but just get a second opinion from the people that matter ( revenue ) just to be safe because I believe you could be in serious difficulty if you got an audit.

Why do you have a number of different drivers with some by the sounds of it living far from the business? Again its hard to give advise without knowing the ful details of the business but staff that dont live near the business does not sound like a good business idea.

Do away with paying these drivers €12 per hour you are crazy. If the business was very successful and turning over big profits I would agree with €12 to good staff but your still getting the business up and running. Do away with the €12 and start delivering on Sundays if your customers are requesting it or else they might go to a competitor.

If your running the business correctly and doing everything by the book it might be worth looking into an Intern to do the deliveries someone that will cost little but that you can train up from the start and after the intern position is up the business could be in a much better state and you can give them a full time position.

Do you have an open insurance policy to ensure they are covered to drive the van? If the "sub contractor" / "driver" does damage in a customers premises or falls on the job do they have a policy in place to cover all this?

Why is one of the drivers being paid to collect the helper??? Staff arrive in and then start being paid if the staff live to far away and your paying to get them collected then hire someone closer. If what you say and these are " self employed " then you should not be collecting them, they should be using there own equipment or hiring the equipment from you. Its hard to give the best advise without knowing all the details.

Moomat

In answer to your original question; no you are not too generous. If your contractors are behaving as proper contractors such as paying their taxes, insurances and administration fees then I doubt they would be clearing more than the minimum wage, they have to cover their own holidays too.
Be careful allowing people control of your equipment and responsibility for representing your company, especially considering the blurred nature of their employment status.
Have a good look at the elements of your business, it appears to me that you could be facing issues with Revenue, employment law and insurance if something goes wrong. If it looks, walks and talks like an employee then they may have an employees rights.

pedronomix

Moomat wrote: »

In answer to your original question; no you are not too generous. If your contractors are behaving as proper contractors such as paying their taxes, insurances and administration fees then I doubt they would be clearing more than the minimum wage, they have to cover their own holidays too.
Be careful allowing people control of your equipment and responsibility for representing your company, especially considering the blurred nature of their employment status.
Have a good look at the elements of your business, it appears to me that you could be facing issues with Revenue, employment law and insurance if something goes wrong. If it looks, walks and talks like an employee then they may have an employees rights.

The OP does not appear too interested in addressing the issues in your last paragraph. I raised similar concerns a couple of days ago without response!!

Moomat

pedronomix wrote: »

The OP does not appear too interested in addressing the issues in your last paragraph. I raised similar concerns a couple of days ago without response!!

I agree, tax issues aside, he is facing a huge problem should anything go wrong. They are, at a very minimum, in de facto service, regardless of what he wants to call them. He is vicariously liable for their actions.

scwazrh

The hourly rates are the least of the OP's problems at the moment!

There is no way the OP's staff could be classed as contractors.OP has said that they only supply labour , are paid by the hour and not piecework and some of them are actually collected for work. Add to this that one or more are insured on his van so the OP must be viewing it as a long term arrangement.

If the revenue become aware of this he will be looking at a large tax bill including penalties and interest .To make things worse he's a sole trader.