Reply to Thread

Originally Posted by flange

in general, startups have a higher percentage of overhead than existing businesses. many though, dont realize it. here is why. lets say this guy works 40 hours a week on these accounts. his current boss has an existing office staff that does all the peperwork, and burden rate is diversified across all service contracts. and lets say for argument, burden on this cost 15/hour for girls. o/p then goes on his own, spends the same 40 hours on the accounts, but then has to do paperwork on saturday. does he get paid overtime to do it, or just do it free. lets say he makes 20/hr. his burden rate on saturday is actually 30/hr if he pays, or his hourly rate DROPS, since he is working for free. since he is a field guy, he is likely less efficient then office girls, and is less organized, another efficiency loss. while this seems a little bit elementary, his profit ratio is lower. if margins are already slim (we dont know), he is working harder for a lower hourly rate.

this is the exact reason why soo many hvac businesses fail in the first three years. guys come to the realization that: they are working harder for less, their wives are unhappy with how much they work, they have missed too many birthdays or other family events, and the things that matter have passed them by.....

and if he has a small shop and so on and so on-i always get a kick out of it when people say a small shop can do the work cheaper,as flange said overhead is a percentage-its all relative.

a guy can sell 500k all day long but if the margins arent there wtf is the point-the minute you go into business for yourself you better realize what your true costs are or you will regret it in a hurry

in general, startups have a higher percentage of overhead than existing businesses. many though, dont realize it. here is why. lets say this guy works 40 hours a week on these accounts. his current boss has an existing office staff that does all the peperwork, and burden rate is diversified across all service contracts. and lets say for argument, burden on this cost 15/hour for girls. o/p then goes on his own, spends the same 40 hours on the accounts, but then has to do paperwork on saturday. does he get paid overtime to do it, or just do it free. lets say he makes 20/hr. his burden rate on saturday is actually 30/hr if he pays, or his hourly rate DROPS, since he is working for free. since he is a field guy, he is likely less efficient then office girls, and is less organized, another efficiency loss. while this seems a little bit elementary, his profit ratio is lower. if margins are already slim (we dont know), he is working harder for a lower hourly rate.

this is the exact reason why soo many hvac businesses fail in the first three years. guys come to the realization that: they are working harder for less, their wives are unhappy with how much they work, they have missed too many birthdays or other family events, and the things that matter have passed them by.....

Originally Posted by freemind

If you are only making 5% on 500K worth of work, you'll have many serious issues with just staying in business......

Yeah, that 500K may only cover so many expenses AND make you a little profit, but we aren't talking about the OP'er opening a business. We are speaking about his employer BENEFITING ANOTHER 500K from one employee bringing business with him. You're right, it should have been negotiated up front, but if the bossman is taking away perks, even though this employee is bringing an ADDITIONAL half million in business, well, can you really defend that?

Should he? Yea, IMO. He already has half a million in work.... How many guys starting out have that benefit?

500k as a one man show? Absolutely go on your own, as an owner operator you'll never see higher profit margin, the trick will be maintaining it when you have some employees and real expenses.

Originally Posted by flange

lots of customers prefer to call their tech first. i encourage it, as sometimes it saves an emergency. a tech can do things over the phone that an office girl never will. office girls are great with papers, but suck with chillers. note, i dont fear my guys competing with me, i dare them to try then tell me how good it is.

I agree. Not only that he should go on his own. Finding help that's qualified is the hardest thing. Always keeps you scrambling. He thinks he is on call now. Good luck is all I can say.

$500k is peanuts!
For an already established business owner that could be $40-50k in his pocket!
Not bad!
How much do you make a year where you are at right now?

lots of customers prefer to call their tech first. i encourage it, as sometimes it saves an emergency. a tech can do things over the phone that an office girl never will. office girls are great with papers, but suck with chillers. note, i dont fear my guys competing with me, i dare them to try then tell me how good it is.

if you bring in a half million dollar job that cost seven hundred to do, you are out of business. just stating the obvious. show me the value, not the price. oh, you didnt get your finders fee? sorry.

To the OP......you are just buying your time till you start your own business. You stated most of these customers will come with you. Also, these customers don't even go through your current companies office.

Maybe, your boss is not greedy, but is smart enough to see what's going on. If I was your employer and knew what you posted, I wouldn't give a crap about compensation to you. I would milk it, until you left.

All valid and true points flange.

I wasn't arguing if your points of business were right.

Just merely pointing out that "the new guy" brings a half mill in work, and the boss is cutting benefits/perks. Something ain't right, you know what I mean? Employee should be shown a fat reward for the new business. Also, I question why the employee is handling the calls? Why doesn't the office?

my 5 % was a hypothetical, since no one knows the real numbers. How do we know the man didnt bring contracts in that arent truly profitable?? a lot of service tehcs only see the number of the contract, and dont follow all of the soft costs attached to it. Boss is already in business. Bosses dont tighten the reins when cash is a plenty, they do so when it gets tight. Why is it tight?

well, a guy starting out is completely different than a guy in business. Taking clients to an established business is one thing, taking them to a one man band another. clients arent dumb. Will all of them jump? of those who do, will the same level of service be provided? if not, will they stay for as long as ittakes to build the biz? life isnt always as simple as it appears from behindthe curtain. The only way ot know for sure is jump in with both feet and no parachute, and flap your arms as hard as it takes to fly. There are things that matter, suhc as creditworthiness, bonding, service call response time, and so forth. Can he guarantee a four hour response to two customers at the same time? I bet his current employer can. How does one guy go to both places if need be?

If you are only making 5% on 500K worth of work, you'll have many serious issues with just staying in business......

Yeah, that 500K may only cover so many expenses AND make you a little profit, but we aren't talking about the OP'er opening a business. We are speaking about his employer BENEFITING ANOTHER 500K from one employee bringing business with him. You're right, it should have been negotiated up front, but if the bossman is taking away perks, even though this employee is bringing an ADDITIONAL half million in business, well, can you really defend that?

Should he? Yea, IMO. He already has half a million in work.... How many guys starting out have that benefit?

500 k is probably just enough to cover a man,girl in the office part time, an office, benefits, insurances, truck, wear and tear, and a little profit. It isnt a bankroll by any means. I used to bring in several million to my former employer when I was a service guy working with the tools. I never asked for a dime over the rate, but then again, I didnt have to do that. My boss appreciated it, and found ways to show me.

Now, on to the question. The answer depends upon many factors, but the relaity is that he should be doing something for you. My feel is that you were hired to be a tech in his company. So, you wird hired with no expectations right? He was supposed to supply all of the proper conditions to keep you gainfully employed. In return, he takes the risk and pays you every friday. A GOOD BOSS would recognize where the work came from, and reward you for it, but doesnt have to do that. If you wanted referral fees, commission, bonueses, you had a few choices, negotiate it up front, or become a sales guy and take on some risk. As a tech, you should be paid well, and if you are briniging in work, should benear or at the top of the pile in your office.

In the market today, can you tell me what his true cost of doing business are? do you have all of the information to do so? if so, can you see his receivables? how much does it cost him to wait for his money? in short, is the 500 k actually profitable work, or does he let you do it as filler work to keep guys working? All owners will take some work from time ot time, just to keep guys working. It isnt a good tihng, but it happens. So, lets say its making five percent. The cost of carrying that money makes it a wash, then you want to be paid for bringing it in?!!!

I know this will be an unpopular answer, but the reality is, if the grass is soo green, why are you playing on the dirt? Jump in, the water is jusst fine. The end of the third month, you will understand.

I'd say that if the customers want YOU as their "go to" guy, then I don't see the problem with taking them when you start your own company.

You could try to negotiate with your empoyer, but chances are greed blurs his vision. He wants it all or nothing. An ego thing, IMO.

You bring him an addition 500K in business, and he takes away perks. Should already tell you what kind of an employer you have. Don't be like him when you start your own business, as the lesson to learn is, it chases away good workers.

Good luck to you, in any event.

Originally Posted by valdelocc

why would you work for somebody when you have such huge income potential working on your own?
You have no legal rights to any of your employers customers, it really doesn't matter if they were your first. water under the bridge, move on.

and his "boss" has no right either ... Customers can buy where they want ... The "boss" doesn't "own" these customers and neither does the OP.

And if under contract those expire or often have a 30 day out etc...

I am sick of companies thinking they own customers ...

If you please them they will stay ,if you don't they will shop...

starting a business requires capital, I let great opportunities pass by cause I didnt have the dough, I almost became the co-owner of an oil well in Nigeria but the guy that sent me the e-mail wanted too much money upfront.

These aren't side jobs, their large automotive facilities, and going on my own , which I intend to do after my wedding, unfortunately requires a financial backer, as it would take at least five high dollar guys to maintain my work, and the automotive industry likes to do things in terms of net 60, which means I have to float $20,000 per man until my payday! Just buying my time, really!

Originally Posted by maxster

if you didn't get it(%...of $$) at the interview forget about it.now that your work is generating bug bucks it's all his,and he is going to flip if you try to touch HIS money

Yeah, at the time, I didn't know theses customers were going to follow me. Now that perks are being taken away and he wants to make things more "black and white". With no grey areas, then business is business. I have already spoke with my customers, as I am the one that manages them all, from the field I might add, they have all expressed their loyalty to me and not my company, and do what you gotta do, is the general consensus, in terms of pulling the plug and moving them to another company and then getting my percentage and micro managing from the field. As it sits they all call me direct, not my company. I just am not sure how to approach the owner with these demands. I guess truthfully, I really don't care about ruffling feathers business is businesswhetherbits discussed then or now, it would be just a matter of his John Hancock on an iron clad contract or I pull the plug!

why would you work for somebody when you have such huge income potential working on your own?
You have no legal rights to any of your employers customers, it really doesn't matter if they were your first. water under the bridge, move on.

Originally Posted by maxster

if you didn't get it(%...of $$) at the interview forget about it.now that your work is generating bug bucks it's all his,and he is going to flip if you try to touch HIS money

This x100.

You should have kept your customers separate.

Others here will try and tell you that you should just be grateful you work for the guy and you owe him. Side jobs are immoral.