Probably like many entrepreneurs, I love business, the creativity and control that it provides, and all the benefits of not having a boss. But the thought of having employees makes me shudder. I’ve always contracted for help and have avoided the employer-employee relationship.
As I think about why this is so, I believe it comes down to cost, accounting, and responsibility. I know, or at least I think I know (not ever having had employees) that it costs much more to have an employee than it does to contract out. You have all sorts of tax issues. Unemployment, workman’s comp, social security, and whatever else might be entailed.
The payroll and accounting side adds some complexity, although I know I would have someone else handle this for me because I enjoy bookkeeping as much as I enjoy having the flu. That’s why I don’t do either. So add more cost to the scenario for accounting.
And the responsibility of knowing that you are providing for someone else’s financial well being. What if my business fails? What if I can’t make payroll? What if I decide to take the business in another direction and this position is no longer needed? I’m not in a place yet where I want to take this on and have someone dependent on me for their finances and support of their family.
Now having said all that, even though I contract for help, I still have all of the other what I’ll call “squishy” employee issues. By this I mean the management side of things. I still need to worry about giving adequate praise, keeping them motivated to a certain degree, and dealing with corrections when performance is poor. I have to hire and fire just like I have employees. I have to train and maintain. I don’t mind any of this. I guess I get all the good parts of working with a team without having to deal with the bad.
For example, I recently had to fire and then hire a new property manager. One of the agreements we make is that either party agrees to give 30 days notice when ending the relationship. The way I keep my end of the bargain is that I continue to pay the leaving manager 30 days after they are gone.
This manager was dismissed on the 15th of the month, and so I paid him a half-month on the 15th when he left, and paid another half-month on the 15th of the following month. As was classic behavior for this manager, I get an email at the beginning of the month that says that he’d really appreciate being paid early because he has bills to pay, and Christmas is coming, and blah blah blah. Surely I could find some goodness in my heart to do him a favor.
Let’s see. He was a LOUSY manager. He caused me a ton of problems, stress, and lost my business thousands of dollars. As I read his email…. do I feel like doing him a favor…. NOPE. Don’t even have to think about that one. Not because I’m a meanie, but because for crying out loud! This is business! The reason I create agreements and systems is so I don’t have to think and to prevent me from making emotional business decisions.
It never was about doing favors. For him, for tenants, for whoever! The beauty of rental property is that pretty much everything is in writing. All parties read papers, agree to what they say, and sign them. There’s never any question about what has been agreed to, or what the consequences are when a party breaks the agreement.
So the manager was told that he would get paid on the 15th exactly as was agreed to. No earlier, no later. It’s business. It’s about cash flow. And doing as we agreed is something he never did understand. After a few expletives from him, that was that. I cut the check on the 15th using all the normal procedures. And then a week later there was one more expletive just for the fun of it. I’m hoping this chapter is finally closed and there won’t be any more leftovers.
I have to tell you about one of the greatest inventions of all time! About a year ago I started to change over all my door locks on my units to a new type of lock. These door knobs come with an interchangeable cylinder in the center that you can quickly swap out at any time. You keep one extra cylinder on hand at all times, and when a tenant moves out, you simply take your spare cylinder and put it in their lock. This way, exiting tenants never have access to their old apartment after they leave, even if they’ve made extra copies of their keys and didn’t turn them in to you.
and my good friend over at