Time to open up shop (detail shop that is)...

[Bubbles Galore]

After testing the waters with some summer detailing last year, I'm ready to make the jump and close off one of my bays to offer detailing full time!

My question is, how should I go about paying my detailers. I would like to 1099 all of my employees and pay them based on a per job percentage. Would something like this make sense?

The "house" (building use, chemicals, equipment) = 20-25% of total sale
The "house" (profit) = 10-15%
The "detailer" = 85-90%

For example, on a $200 sale, the car wash would receive $40 for building use (20%), $16 as profit (10% of total sale minus original building use "fee"), and the detailer would receive $144 as payment for the job (the remaining balance)...

Not sure if these numbers actually work, this has been the part of the shop that I have been putting off far too long. Should the "house" receive more? Definitely looking for some input on what some of you pay your detailers.

Thanks in advance!

 

[Waxman]

Paying a detailer $144 for a $200 detail sounds crazy. Way too high.

I pay my detailers an hourly wage and W-2 them all. They double as carwash staff. They are dual-trained.

I'm sure other experts will have their own ideas on this, but I have had detail employees since 1996 and this has worked fine for me, produced quality work and my employee turnover is very low.

 

[pitzerwm]

1099ing an "employee" will probably get you paying double the taxes. Go to the IRS site, there are 21 things that have to happen to make them a 1099 candidate.

 

[Bubbles Galore]

Thanks for the tips guys! In reviewing my initial numbers, that does seem high...I have a lot more number crunching to do.

 

[soapy]

From the research I have done on detailing most experts say you should shoot for 30 to 35% labor costs. This being said most detail shops seem to be paying around 50% for labor.

 

[buda]

Paying employees

Bubbles

You are an established business with a great deal to lose if you play games with the IRS and worse the Labor Commission of your State, especially if you do not provide Workers Comp Insurance.

What the detail industry for years has tried to fob off as contract labor is not at all considered contract labor by the IRS nor the Labor Commission. That is the bottomline, and if you get caught or worse yet, a detailer gets injured you are in BIG trouble with the Labor Commission. In many states they can fine you up to $25,000 plus $1,000 a day in additional fines for everyday you had employees and did not provide Workers Comp insurance.

If you are going to provide a one bay detail operation you are probably not going to make much money because you are not going to do much production.

At best two complete details a day with one man and maybe 3 to 4 with one man. Figure out the numbers say at $175 a complete detail, before costs.

You would be best to offer maintance detail services: wash and wax; wash and carpet shampoo. Services that can be done in 15 to 30 minutes or less with two men or one man and sell for say $39.95 if you have an automatic car wash. If you have to wash the car by hand then you have to charge at least $49.95 to $59.95

Hire the employees and don't try to beat the system because it will beat you.

You could play the game that a lot of small detail operators do and hope they don't get caught, BUT they don't have much to loose as you do.

Anytime a person with assets and money considers violating the law ask yourself, "can I afford the consequences, if I get caught?"

Just some well intentioned thoughts on the subject.

Regards
Bud Abraham
DETAIL PLUS SYSTEMS

 

[Bubbles Galore]

Always good to hear a fresh perspective and that is appreciated! Thanks for the tips! It appears as though some type of employee is the way to go...

 

[Waxman]

I fully agree with BudA. And I will add that detail shops should operate legitimately and in doing so they improve the whole industry.

To insure that your are properly pricing your services you must consider all variable costs (along with fixed costs of course) involved in making sales. Labor is a major component of a service business and that needs to be very carefully considered. You will have to do some guessing and projecting as with all new ventures. But guess on the high side and go legit; W-2 all employees, provide the proper workers Comp. coverage, offer uniforms and nice, high standards and let your pricing reflect all of these and more.

If you want to do it any other way I would choose to not do it at all. And, btw, it sounds like you want to run a top-quality operation, so kudos to you.

 

[Waxman]

From the research I have done on detailing most experts say you should shoot for 30 to 35% labor costs. This being said most detail shops seem to be paying around 50% for labor.

I assume you are adding in the W.C. insurance and other employee costs besides just the wages paid per detail.

 

[mjc3333]

I've been in the detail business for 20 years along with SS washes and car sales etc. I used to pay my detailers an hourly rate with management looking over their shoulder all day long. I switch to a flat rate or piece rate system 7 years ago. I give my working manager 40% of the total sale less any major parts (wipers window vents headlight covers etc.) If there are other workers, he has to pay them out of his 40%. That way he ends up getting a % of all of the detail work, not just the work performed by him. With matching taxes health ins work comp. the total cost to me is about 50% of the sale. $200 job grosses me $100. I then have to pay all of my other expenses out of this (debt utilities adv supplies etc.) I end up with about 15-20%. This is not much $, but it adds onto the other income from the other businesses. If you can do this in one of your bays, and pay the detailer in this fashion, you should make out pretty well (not much overhead). Definitely pay them a real payroll check, NOT on the side. To qualify for a "1099" independent contractor, they could not use your facility to get the job done. Also they would not be on any kind of schedule; they would make up their own hours, etc.