The main goal of hiring employees is to increase the money going into the owner’s pocket. Keep this in mind when deciding which employee is most helpful for you!
We have written blog posts that cover Preparing for Your First Employee and detailed the various Employee Types. Now, we are going to cover some ways to determine which of these employee types is actually right for your business. This post is directed mainly at hiring the first employee, but it is also applicable to hiring your 4th or 20th employee.
For this post, we are going to assume the owner is working a 60-hour week and the breakdown in time spent at the shop is as follows:
Hiring a technician first may not be a good idea
At face value, most people think hiring a technician will bring in the most money. While this makes sense on paper, it rarely works out that way.
The thinking is this: “If I hire a technician to work 40 hours each week, he will bring in 40 hours of labor. If I pay him $20/hour and charge the customer $100/hour, I’ll make an extra $3,200 each month!” But, there are a lot of assumptions being made in this thought process that don’t always work as intended.
First, you are assuming your new hire is as efficient as you. In reality, your technician will never be as efficient as you. It will also take the new technician several weeks or months to get familiarized with your platform and become proficient at the installs. Something you can complete in 5 hours may take them 6 or 7 hours to finish.
Second, you assume they will never make mistakes. While nobody is perfect, a new employee is more likely to make mistakes than you are. Also, they may not be as meticulous which means more things will slip through the cracks and cause issues later.
Third, you assume you have enough jobs to absorb the additional 40 hours of labor capacity each week for the foreseeable future. While you may be very busy right now and can’t seem to get ahead of the work, it is very difficult to ensure there is enough work to fill a technician’s schedule each week. With the additional capacity of man hours, you have also increased the number of phone calls, estimates, invoice payments, parts orders, etc. All of this leaves you with less time to work on cars.
Fourth, if you have never managed people before, you may have difficulty adapting to the new job requirements. Being a manager isn’t for everybody so don’t feel discouraged if you have difficulty with this position.
Even considering all that was mentioned above, let’s pretend that we add a technician at 40 hours/week and they are 100% efficient and don’t make any mistakes. While the new technician adds 66% (40-man hours on top of your 60 each week) to your total available man hours, he also increases your overhead load by 66%. Below is a graphical representation of what that does to your weekly breakdown:
As you can see, hiring a technician first significantly reduces your available time to work on cars. We see this time and time again at performance shops. They get extremely busy, hire a technician, and then actually get less work done. If you encountered this scenario, this graph explains why!
And things get much worse if you factor in the reality that your technician is not as fast and will make more mistakes than you. The total number of billed hours begins to drop very quickly.
Hiring to increase your efficiency
As mentioned in the beginning of this post, the most important thing about an employee is their ability to add money to your pocket. As the owner of a 1-man shop, your time is split between direct labor (working on cars) and overhead labor (paying bills, answering the phone, cleaning, etc.). If you hire somebody to do some of the overhead tasks for you, it will free up time to work on cars.
The easiest and least-risky employee to hire is the Shop Hand. This person needs no prior automotive experience and there aren’t any special skills involved with their activities. Qualified applicants also in abundant supply because enthusiasm is all that is required to do the job.
You have most certainly heard stories about people who got their automotive career started by sweeping the floors and cleaning the bathrooms. That is the person you are looking for with a shop hand. It is somebody who is enthusiastic about the automotive industry and ready to learn.
Hiring a shop hand will increase your service efficiency almost immediately. This is because they can do things like mopping & sweeping the floors, taking out the trash, and cleaning tools or machines. As the sole person at the shop, you are currently doing all these activities while you could be working on cars.
If you have the shop hand come Monday, Wednesday, and Friday for 3 hours each afternoon, that will free up 9 hours each week for you to work on cars. If you pay that employee $10/hour, you could net as much as $810 each week simply because you won’t be doing overhead activities. Here is what your week now looks like using the original data:
While the above example is an ideal situation, the math makes sense in almost any scenario. The Shop Hand offloads the simple tasks that don’t generate any money which frees up time for you to work on cars. The key is to start the employee off slow and ramp up their hours as needed. Finding a high school or trade school student for this job is relatively simple and low risk for you.
An added bonus is that you can potentially train this employee to do basic installs or just disassemble things you need to work on. This process of slowly increasing their job duties allows you to grow the business at a reasonable pace with little risk.
Front Desk or Sales
Another position that can offload a lot of the overhead tasks is the Front Desk person. This position is a little harder to fill because it requires a bit of accounting and sales knowledge to be performed well. Luckily, these skills can be taught and are made easier by an organized and proper accounting system.
If you have created a detailed list of services you offer and parts you sell, this employee can make basic estimates. This employee can also enter in all the bills and take payments from customers. If a customer calls to ask about the progress of their build, the front desk person can look up the status on My Shop Assist and answer their question right away. This person can also be in charge of posting to social media and updating the website with new products or services.
All of these activities are relatively simple but can take up a lot of your time if you are a 1-man shop. Below shows how this employee can free up even more time for you to work on cars:
Just like the shop hand employee, the purpose of this employee is to offload a lot of the tasks that keep you from working on cars. If they spend 6 hours each week entering bills, answering basic phone & email questions, and making Facebook posts, that is 6 more hours freed up for you to work on cars and bill time to customers.
This position isn’t really applicable to a small shop, but can be necessary if you have 3 or 4 technicians in the future. The role of this person is to ensure the technicians have all the tools and parts needed to complete an install as quickly as possible.
You can consider hiring this type of employee if you enjoy making estimates for customers, creating content for your website & media outlets, or going to events to showcase your builds. Essentially, you need the Manager to ensure things are going smoothly in the shop while you promote your business.
A Manager can also come in handy if you just want to focus on doing the work and not talking with customers. While it is difficult to separate yourself from customer interactions, doing so will ensure that you bill as many hours as possible while you are at the shop. We see this happen more at machine shops or custom fabrication businesses where the owner is the most skilled technician and doesn’t want to interact with customers.
The crucial thing to remember with all of these positions is that they increase the money going into your pocket. There is a big difference between increasing revenue (not necessary into your pocket) and profit (going directly to your pocket).
That is why we caution you from hiring a technician as your first employee. It is much easier to hire a part time Shop Hand or Front Desk person to offload some of the activities you don’t like to do so that you can spend more time working on cars.
If you are looking to grow your business, keep that in mind with each person that you hire. If you want to prepare your shop to handle the extra workload, please check out our My Shop Assist project management software!