Most pool service companies in the U.S. are small businesses with few employees, or perhaps just one — the business owner.
The size of the market plays a big role in this business structure, but we know there are many single polers out there. At some point, those companies will max out the number of pools they can service on their own and will have to make an important decision.
Are they satisfied with their current business revenues, or do they want to scale and grow? If they want to expand, they will take the steps necessary to hire their first pool service pro. Many business owners allow fear to paralyze them from scaling their companies, as they feel they are not deserving of big success, or that having employees will be too hard to manage. Stop torturing yourself and become the person you have decided to be — a successful business owner with one or more employees.
The key to business growth and hiring is to plan effectively. This helps you avoid costly mistakes or unplanned expenses. Nothing is a sure thing in business, but the likelihood of success increases significantly by dedicated planning.
There are several advantages to hiring your first employee, including increased productivity, better customer service and, as a result, higher revenues. Perhaps the most important advantage for a business owner: Once the employee fully integrates into the company, you’ll experience less stress and burnout, and an increased ability to focus on strategic aspects of the business versus everyday tasks.
A Deep Dive Into Financials
Before preparing to hire their first pool service pro, a business owner should analyze their business structure and take an honest look at the financials.
Are you working within a budget, and are you fully aware of expense buckets and where you are spending your money? Do you know how much money it will cost to hire an employee, and do you have the current reserves to withstand the increased costs for three to six months before you see increased revenue?
When you are honest with yourself, you can be realistic about the success of this venture, so you don’t go into this new phase blindly. Schedule a meeting with a local CPA to get advice on how to prepare your finances for growth. That will be the best money you spend on your business, whether or not you decide to hire your first service tech. There are also many coaches and consultants in the industry who can help you analyze your business and set goals. Access your network and ask colleagues for referrals.
Truly understanding your business financials, analyzing them monthly, and setting success metrics can set you apart from most small businesses in the industry.
Another question to ask yourself: Will you be a good leader? The most effective ones communicate effectively, have a clear vision for the company and communicate that vision. They also hold themselves and employees accountable for actions and decisions. A good leader inspires and motivates employees to perform to their best, and even prepares staffers for success. There are many options for leadership training online, and most of the industry trade shows and regional meetings offer a leadership track.
As you prepare to hire the first service pro, you can expect to increase expenses in the form of labor costs by about $5,000 per month, depending on your location and job market. To do that, you must prepare for the rise in costs to your business ahead of time, since increased revenue may be delayed 3-6 months.
Run the business tight by cutting or reducing any expenses you can. The amount of money required in reserves to hire your first service tech can certainly vary depending on location, but here are some costs you can expect when hiring your first employee.
Wages: You can easily find a competitive wage for pool pros in your area just by asking your network in the pool industry. Keep in mind that employees won’t stay if they are not appreciated, so offer a competitive wage from the start.
Benefits: Health insurance and retirement plans may be too expensive with your first employee, but you can provide education as a benefit up front. Increasing their skill set is a huge benefit to them and you that many employers don’t offer.
Payroll taxes and workers’ compensation: The CPA you consult can help estimate these costs, but employers are required to withhold certain taxes from employee wages. You also may be required to purchase workers’ compensation insurance, which provides benefits to employees who are injured on the job. Make sure you are compliant with tax laws and regulations.
Equipment and supplies: Develop a list of needed equipment and supplies, and estimate their costs. If you can’t find a low-cost vehicle for them, give them a car credit to use their own vehicle for the first six months. You can research average car credit amounts or consult with your CPA about the appropriate amount.
The general rule of thumb is to have at least six months’ worth of expected expenses saved or borrowed before hiring your first employee.
Hiring your first pool service pro is an investment in yourself and your company. The first three to six months will be hard, as you see increased expenses with little revenue growth. However, that will begin to diminish once the new hire is trained, and you can focus on strategic business growth.
You should have $25,000-$30,000 in savings or lines of credit when you hire your first employee. If you need to set up lines of credit or borrow money, having good personal and business credit is important. Paying high interest rates is not a good business model, as it puts the business at higher risk of not being able to pay the money back. The goal should be the lowest interest rate possible on loans and 0% for 12 to 16 months on lines of credit.
Business owners should not feel ashamed if their personal or business credit needs a boost. If you need help, consult a credit building association, which can help boost both your personal and business credit. The latter is your company’s ability to borrow using your EIN number versus your social security number and is an asset to the company. If you ever plan to sell the business, potential buyers will look at your business credit score. It also provides new lending opportunities for your company.
The credit building process can take several months, so if you plan to hire in the next year, you should start the process now, especially if you have bad credit.
Once you have successfully completed the steps above and developed a time line and plan for hiring your first pool service pro, you can focus on finding the right person.