In Part I of this hiring series about hiring your first employee, I went over who you should hire and what this new hire should be doing. In this part of the series, I’ll delve into the more technical side of thing.
SHOULD YOU HIRE AN EMPLOYEE OR A FREELANCER?
First of all, I’m not an attorney nor a CPA, and you should chat with both of these people about the appropriate status of your new hire and how you should structure the pay. But here’s what I’ll share about what I did in my business and why I did it.
Before you get into all that craziness, consider:
- How do you want this new person to support you?
- What does that look like for you?
Does that mean the designer works with you together on site, prep, and wrap? Or does this person work independently on their own? If so, how much power will they have? How much responsibility will they have? If you’re hiring a designer, how much power will they have on projects? Will you give creative control over to the designer or will you have a list of guidelines for the designer to follow?
These answers will not only help you shape up the vision of your business, but it’ll also help you figure out that classification of your new hire, i.e. employee or freelancer.
This decision will consequently affect how you’ll pay this person. With employees, you can pay a salary or hourly. With a freelancer, you can pay per project, a day rate or pay hourly. These two legal structures have very different rules legally and especially when it comes to payroll and taxes, so talk to your local HR consultants to see what’re some of the legal bases that you’ll need to be covered.
For my business, early on in my business, my assistant did EVERYTHING, ranging from paperwork and restocking props in the studio to making beds and moving furniture on site. I then realized that was way too much to ask of one assistant.
Then I had this idea to train assistants to eventually take over staging projects, so my assistants were employees since I was telling them exactly what I want them to do and how I want them to do it.
The model worked very well until we started having issues. Assistants that were great with styling were not so great in the warehouse stocking and restocking inventory. I came to the realization that working on site v. working in studio require two different personalities. In the studio, I need someone who loves to organize. On the site, I need someone who enjoys the styling stuff and doesn’t mind the grunt work like steaming bedspreads.
That turned into the model of only having freelancers who would either organize warehouse or who only go to the site and assist.
At the time, I was doing a lot of freelancing work on photo shoots assisting senior stylists and doing visual and merchandising for stores. Because of those networks, I met a lot of other freelancers. Interestingly, many of them that I’ve met had freelanced for home staging companies.
That’s when it hit me: the job descriptions of visual merchandisers or a stylist assistant are fairly similar to a home staging assistant’s.
Additionally, it was interesting to chat with freelancers who had freelanced for other home staging companies in the bay area that are on a much bigger scale operations than what I had. That’s when I started having a freelancer roster that I’d call when we have bigger projects that I need help with.
It worked out very well for us because of the flexibility, and it was much easier for bookkeeping to have freelancers. Plus, having people already have built-in skills like problem-solving and grit, it was much easier than grooming employees to become their own managers.
HOW MUCH SHOULD I PAY THIS PERSON?
Once you’ve decided a freelancer vs. an employee, it’s time to figure out how you pay this person.
When you’re hiring designers v. assistants or freelancers v. employees, your budget will look differently as well. In terms of compensation, that varies market by market. I personally didn’t hire another designer. I wanted assistants to be groomed to become stagers, so that was the route I took.
I started my assistants by paying them above minimum wage, on par with someone who would be doing similar tasks in my market. I searched Craig’s List and look through a bunch of hiring ads to come up with a number that I’m comfortable with. I also had freelanced for big companies doing visual merchandising. A staging assistant’s job is generally pretty similar to the job responsibilities and expectations of a visual merchandiser, so I looked at those compensation structures as well because I want to be in the ballpark of the market rate.
In San Francisco Bay Area, living costs are high. It’s important to me to pay people living wages WHILE staying within budget for my profit margins. This is where it’s important (and helpful) to know your numbers: how many hours your projects average and how many hours you’ll need to book someone for.
When it comes to hiring, I strongly recommend looking at your budget as well and have a discussion with your CPA in regards to hiring:
- How much budget realistically will you have to hire someone?
- What are some of the hidden costs of hiring?
The financial cost of an employee is not just the hourly wage you’re paying him / her. It includes payroll taxes that you’ll need to pay to the government agencies, a potential bump in your liability insurance, having worker’s compensation (at least in California. This can be very expensive even with one employee, especially if you have a warehouse space.), additional training time, etc.
I mentioned before that you can pay someone a salary, a day rate, by project or a day rate. This decision depends on your preference and comfort level (obviously, following your local HR laws is important).
The budgeting process will help you determine how many hours per week you can have someone in to help you. Like I said earlier, hiring a designer v. hiring an assistant means different wage brackets. So that will help you shape up the decision of hiring as well.
In Part III, I’ll go over how I hire people and what I recommend when it comes to managing this new person.