How do I figure out if I can actually afford to hire someone?
Hello hello and welcome to Greedy Bitch, a podcast where groomers stop apologizing for charging their worth. I’m your host River Lee, founder of the Savvy Groomer.
Today's episode is sponsored by the Pay Masterclass, a 6-module masterclass where we teach you all about paying your employees legally.
Paying 50% is bull shit. We here at the Savvy Groomer have cracked the code of paying employees a liveable wage they’re happy with and creating sustainable profit for pet grooming business owners. Introducing the Pay Masterclass, a 6-module exploration on how to legally pay W2 employees, specifically designed for the pet grooming business. Busting myths while teaching you the skills and winning formulas you need to create a pay structure that actually works.
Let’s talk about today's topic:
How do I figure out if I can actually afford to hire someone?
We know that running a pet grooming business can be challenging but also incredibly rewarding. It’s important for us to stay informed about changes and regulations that impact our business and our employees. I know talking about wages can seem a bit dry, but it’s an essential aspect of being a responsible business owner. Paying your employees fairly not only shows respect for their hard work but also helps maintain a motivated and loyal team.
Minimum wage affects every business. First things first - what is the minimum wage? Simply put, it’s the lowest amount of money an employer must legally pay their employees per hour of work. Minimum wage laws are in place to protect workers and ensure they receive a fair compensation for their labor. As business owners, it’s crucial for us to stay up to date with the minimum wage requirements in our area. These requirements can vary from state to state or even within different cities, so be sure to check the specific regulations for your location. Trust me, you don’t want any legal headaches! The federal minimum wage is currently set at $7.25 per hour, but it’s important to note that many states are moving towards a $15 minimum wage.
We all know that pet grooming is more than just a job - it’s a passion. And part of that passion is ensuring that our employees are not just surviving but thriving.
So, what exactly is a livable wage? Well, it’s more than just the minimum wage - it’s a wage that allows our employees to cover their basic needs and have a decent standard of living. It’s about ensuring that they can afford housing, food, healthcare, and other essentials without constantly struggling to make ends meet. As pet grooming business owners, we have the power to make a real difference in the lives of our employees. By offering a livable wage, we not only demonstrate our appreciation for their hard work but also foster a sense of loyalty and dedication to our team.
Let’s not underestimate the positive impact a livable wage can have on our industry as a whole. By setting the bar high and advocating for fair compensation, we contribute to raising the standards and professionalism of grooming. This attracts passionate individuals who see grooming as a viable and fulfilling career path.
Pet grooming business owners can determine if they can afford to hire someone based upon these wage considerations by looking up the cost of living in their area. We recommend going to a reliable source like Zillow and looking up the average rental cost of a 2-bedroom, 1-bathroom apartment in a decent area that allows pets. To ensure your employee can afford these apartments, they should ideally be earning a minimum of 2-4 times the rent amount. This is a really helpful guideline.
You may be wondering what to do if you find that you can’t pay your employees a livable wage.
If you realize that you can’t provide a livable wage to your employees, it’s critical that you reassess your prices. Price increases can be intimidating, but they are necessary to account for factors like inflation, added experience, and other business costs. It’s essential to align your pricing with the financial well-being of your employees.
Before making any adjustments to payroll, there are some steps that you should take to determine whether you can afford these employees.
It’s important to analyze key performance indicators (KPIs) and payroll metrics. KPIs are quantifiable measures that track performance over time for specific objectives. We highly recommend that you take the Price Increase Masterclass to understand your KPIs and how to calculate them effectively. The Price Increase Masterclass is a 6-module masterclass where we teach you how to formulate and implement your price increase so you can finally make money and grow your business.
What are some examples of payroll metrics that business owners should consider?
One important metric is the percentage of payroll costs in relation to gross profit. As a general rule, payroll costs should be a maximum of 30% of gross profit. This includes wages, benefits, and other related expenses. To calculate your gross profit, subtract the cost of goods sold (COGS) from your sales. For the grooming industry, COGS are typically zero or negligible. Knowing these metrics can help business owners make informed decisions about their payroll.
It’s crucial for pet grooming business owners to have a clear understanding of their financial situation and KPIs before making any significant payroll adjustments. This ensures that the business can afford the added costs without compromising its overall stability. Seeking professional guidance or taking relevant courses can provide valuable insights into managing payroll effectively.
We hope that you found this information helpful in evaluating your ability to hire new employees!
If you guys are interested in learning more about the Pay Masterclass, be sure to visit me at savvygroomer.com/pgmc. This is a 6-module masterclass where we teach you how to pay your employees.
Thank you all so much for listening to this podcast, How do I figure out if I can actually afford to hire someone?. Be sure to visit me at SavvyGroomer.com to see my current opportunities to work with me in growing your pet grooming business plus more free resources for you to learn. See you in our community on Facebook - Savvy Pet Professionals! As always, Happy Grooming