How to pay detailer who is also manager

[stevovet]

Hello,

I'm new here so please excuse any procedural errors!

I have a 3 ss/1 automatic carwash on a very large lot. My manager (who does an excellent job btw) asked me this summer i f he could put up a canopy and do some detailing on the weekends (he is NOT using one of the bays). I told him fine and to keep it all as a bonus this summer but if it became substantial we would need to work out an arrangement. We live in the mountains of Colorado so I was anticipating this to be just a summer gig.

Well, he is kicking butt. He does about $500 a weekend. He supplies all the material and labor. I provide space, a customer base, office supplies, electricity/water etc etc.

What do you think a fair arrangement should be? I want to keep it where he collects everything and supplies all materiele, labor etc. I just want a percentage of his sales.

What do you think a fair number would be?

Thanks,

Steve

 

[MEP001]

Unless he's doing something dishonest, he's improving on your business just by being a presence on weekends. You're already benefiting - unless he wants to make improvements to his business that would justify charging rent, why ask for a cut of his work?

 

[stevovet]

I hear ya and thanks and have had those thoughts too. But would I let a stranger come and run a $25k per year business on my site. He gets paid for 30 hours a week work so he's already supposed to be on site during weekend hours. I think the house deserves a cut.

 

[jfmoran]

Big Mistake

Since he is on your property and is your employee he is not in his own business. You say he covers the labor. Are these employees of his or is it "under the table" labor. Who's paying Work Comp, Liability Insurance, Payroll taxes, etc... If he's not a legitimate business, then You carry ALL liability.

I'm afraid you made a mistake letting him keep everything from the beginning, despite the fact that you are correct and deserve a "cut" to cover overhead, liabilty and goodwill, you are gonna come across as "greedy," depending on how you handle this. I would sit him down, explain to him the mistake you made, and come to some form of mutual agreement.

By the way, I think if you run the numbers as a legitimate business profit center you will find that $500/wk is not exactly kicking butt. As a cash, non-legit side business it's a good deal, but that's about it.

 

[Mr. Clean]

Yes, detailing builds traffic, but this arrangement has inherent risk to you and your business. How is the work sold? Does the customer assume that your employees are performing the work thereby holding you liable should damage occur? Should an employee get injured while there doing the detail, again, will you be held liable?

Beyond a piece of the action, I would want proof that this fellow has his own liability policy.

Arrangements can be loose and simple and work out fine until something unforeseen occurs, then it's too late. If this is a viable and growing enterprise, it should be done with a formal agreement and the utmost professionalism.

 

[buda]

Mr Moran is absolutely correct, this man is your employee. You are responsible for all the Workers Compensation; FICA, etc. Also you are resposible for any damage to the cars on your policy, and in fact, I bet if your insurance company knew you were detailing cars your current policy would not cover that part of the activity. As well, the personal liability to people is your responsibility.

This is not his business it is your business and he is getting all the money.

The way to broach this with him is to tell him that because you are responsible for the liablity of the cars and the individuals on the site you have to set up a different arrangement.

One thing you could do is tell him is that he set up his own business; file an assumed business name; get his own insurance.

You will take him off the payroll on weekends and collect the money of which you will take 10% for rent.

Regards
bud Abraham

 

[Waxman]

I will add this:

Set a sales goal for detailing so you can determine when it is warranted to build a detail shop. You're only going to get so far with one detailer under a canopy.

I have a 4 bay detail shop and we stay busy. Think about it; I can turn on the lights and turn up the heat on wet, gloomy days and detail cars. If I get over-booked, I can add a Sunday shift or night shift.

I may be jumping way ahead of your question, but you may be finding a demand exists to support a professional shop, which could work well with your carwash.

 

[stevovet]

thank you all. I was thinking along those lines Bud, reduce his payroll hours on the weekends and take a small percentage of his sales. I do not feel he has the business acumen (or desire) to set up a seperate business entity, get insurance, etc (ie. he is a worker and I do not say that in a bad light, its just what it is...some of us are comfortable as Indians and some as Chiefs), thus I am responsible for liability, insurance, etc.

If it progresses Waxman I will do the same and just make him a non-equity partner in the new detail shop. My friend who mentored me into this business started self-serve, built a big detail shop and then stopped detailing completely cuz it went against the grain of why he got in the self-serve business in the first place (added employees and liability).

Steve

 

[Waxman]

Maybe question your friend's mentoring ability if he built a big detail shop not realizing it would be labor and management intensive whereas SS carwash is not. That's not even 'carwash 101'; it's 'carwash 097'. Just sayin'....

 

[pitzerwm]

Just to be safe, IMO I wouldn't pay him for the weekends that he is doing his thing. Make it part of the rent structure that he agrees to handle any emergency issues while he is there.

The less legal ties you have with him while he "is running his business" the better off you are, when something goes wrong. You also need to verify that he has a business license, insurance, that names you as an additional insured, and maybe a bond.

He may find out that when he gets legal, there isn't enough money. That is how the world is. You are the one that everything to lose and not much to gain.

 

[smokun]

Consider ALL Your Options... and Liabilities!

Time to ask yourself a few questions:

As previously inferred, the biggest liability is injury. If he is operating under your umbrella, your risk is significant. If he does not have his own payroll, and is operating as an independent concession, the risk remains with you.

What will you do if he becomes too much of a prima donna... and exerts too much control over your business? What if the detailing business gets really sweet, and he leverages his control over "your" customers?

You will likely find that the idea of treating him as though he is a partner, and allowing him to project that perception to your existing clientele, seems destined to wind up in conflict.

Be sides, you may wake up and realize that detailing is a really powerful profit center. You're positioning him to take the cream off the top, most likely because you fail to realize the true value of that segment of the business. Giving him control of all the potential detailing business seems foolish, especially given the situation of a ready-made wash facility with established clientele... in an improved facility... with all the benefits of a freestanding detail operation... and few if any drawbacks.

I suggest that you consider all the options and possibly realize that he should remain an employee for YOUR detail business... and provide a fair incentive structure for you... and whomever runs the detail activity.

Bottom-Line: Control your business and its clientele... and upgrade your operation with a true after-care detailing component. You won't regret it.

 

[Waxman]

Very well put, Mr. Okun. I agree with everything you said there.

 

[Jeff_L]

Digging up an old post. Stevovet, curious as to what arrangement you made and the outcome now 3yrs later.

 

[soonermajic]

I'm curious as well....