Starting a small business, should I hire employees?
My wife just started her own house cleaning service. We live in Texas in an Oil Town that is virtually recession proof. I’ve never ran a business before so I want to check and see if my calculations are correct, and see if it would be cost effective to hire a few employees.
Income: My wife can clean an average house in 3 hours or less. The going rate for a 3 hour house is about . We have started this business 3 weeks ago and she’s already got 8 houses. We get called out to about 15 quote requests a week. So how about we charge per house. 2 houses per day = 6 hours of work X 6 days a week = 36 hours a week. /house X 2 houses per day X 6 days per week = 4 weeks in a month = 20. That isn’t too bad an income for being your own boss.
Lets say I hire an employee for /hr and offer 1 week paid vacation for a benefit. According to www.jolanders.com and her Employee Cost Calculator, that /hr employee would actually cost me /hr.
/hr X 36hr per week = 4 X 4 weeks per month = 16 salary. We’ve already figured that for each "Full Schedule" (2 houses per day X 6 days) that for each Full Schedule the profit is 20. Take 20 – 16 and you get 04 profit per employee.
Now I did a marketing search for our area. The number of people in our area that have an income of ,000 per year is over 18,000. So there’s plenty of people in our area that could be potential customers.
Most people are asking to have their house cleaned twice a month. So for a full schedule, we need 24 houses. We’re getting half that many quote requests per week. If we hired 5 employees we would need 120 houses to keep them busy. Add my wifes 24 houses to keep her busy, and the total is 144 houses total out of over 18,000 potential customers. My wifes income would be 20. A profit of 04 per employee = 20 profit, added to my wifes 20 = 40 income per month.
We have no expenses in this business except for advertising. The customers provide the cleaning supplies. We operate out of our apartment, so we don’t have to pay rent for an office. So other than what we decide to pay in advertising this business is pure profit.
Is there anything I’m missing though? I know this post is pretty rambling, so I appologize. If you can make sence of this, let me know what you think.
We plan on filling my wifes schedule first. Then add 1 employee. That person can go around with my wife and be trained while their schedule is being filled. When that schedule is filled we will hire 1 more, and have that person go with my wife while we are working on filling that new schedule, and so on.
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Tagged with: apartment • being your own boss • benefit • cleaning service • cost calculator • hr employee • marketing • oil town • recession proof • salary
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Do not go overboard on hiring people. Start by hiring one or two employees. Get them up to speed and make sure you can trust them before hiring the next two.
You will want to invest in company cel phones. Your cleaners will be mobile and unless you want to go to each house with them, you will need a way to keep tabs on them.
You might have to take out a huge umbrella insurance policy. What if your cleaners get into an accident on the way to the house? Or breaks something valuable? Or accidentally burns the house down?
You really should provide your own cleaning products. Suppose some home owner’s vacuum has bad wiring? It is better that you use your own vacuum and keep them well maintained. Add a little to your prices to cover the expenses, $5 per house should do it.
Talk to the Small Business Administration to make sure I did not forget something important.
Best of luck.
hi, it is best not too so early or until you have gained a fair amount of industry experience. The compliance costs of having employees is very high, for example to comply with tax regulations and also employee benefit regulations etc
Don’t hire people – you’ll open a whole new can of worms. If necessary sub contract work to others.