How Do You Know When You’re Ready To Hire Your First Inspector Or Your Next Inspector?
- A good rule of thumb for hiring your first or next inspector is if you or your inspector(s) are 80% full consistently then it’s time to recruit a new inspector into the firm.
- You also need to have solid marketing systems in place so that you can generate enough business for you and your existing inspectors before you bring someone else in.
- You want to make sure that you are in growth mode and you are truly adding new business above and beyond what you or your existing team can handle.
- Finally, be sure that there is enough business in your local market to support another inspector.
Okay, now that you’re ready to hire you’ve got to tackle a few issues to ensure that you will be successful with the new hire. Hiring mistakes are hugely expensive and you want to avoid them at all costs.
Pre-Employment Testing And Screening
The last thing you want to do is hire an inspector without doing any pre-employment testing and screening. If you don’t do any pre-employment screening on the people you hire, unbeknownst to you, they could have a criminal background or bad motor vehicle record or some other problem that can come back to bite you later on.
You should never hire an inspector and put them in someone else’s home without doing a background check. Also, credit checks are very important as well. If something gets stolen from a home and your home inspector has serious financial troubles, will he or she be more likely to be a suspect?
Finally, you should be sure to pull a motor vehicle report on each inspector prospect. Inspectors have to drive to and from the job site and if they have a bad MVR, your insurance company will not pick them up on your insurance policy.
Inspector Compensation
This is an area in which home inspectors don’t get it right many times. Home inspection business owners think that they need to pay a larger split than the actually need to. They tell themselves. oh I wouldn’t work for that lower split so they think no one else will either. As you already know, America is significantly underemployed and unemployed and quality people are working for $10 to $12 an hour. Even if you paid a home inspector 28% that person would be making way more than $12 per hour. Here’s the take away… Don’t pay more than you have to because you think you wouldn’t work for that amount! You can get great quality home inspectors to work for you without breaking the bank.
Employment Agreement
Whether you are hiring your first home inspector or your seventh, you need to have an employment agreement. You need to be able to spell out to the home inspector all of his or her duties and responsibilities. You should also share with them how they’re going to get an increase in their compensation.
You also need to determine whether you are going to use a non-compete agreement (if it’s legal in your state) as opposed to a non-solicitation/nondisclosure agreement. A non-compete agreement certainly gives you the greatest amount of safety when hiring a new inspector. However, many states don’t permit a non-compete agreement and it’s a problem when it comes to recruiting inspectors. Few people are willing to sign an agreement that says they can no longer work in a specific area, for a specific period of time if they leave your firm. Non-compete agreements in many
cases hamper the recruiting of quality inspectors into your firm. Determine if a non-solicitation/non-disclosure agreement will work for you and if so use that instead of a non-compete agreement.
W2 vs 1099
Home inspectors in America make a huge mistake every day by bringing their inspectors on as an independent contractor instead of an employee. The IRS published a 20 rule test that you can review to determine if you’re home inspector is truly an independent contractor, as opposed to an employee.
If you elect to make your home inspector an independent contractor and the IRS determines that your inspector is truly an employee, you will be liable for all of the back taxes for that person, plus penalties and interest.
Note: The IRS is aggressively pursuing employee classification in lots of small businesses across America today because tax revenues are down.
Common Hiring Mistakes
Below are some examples of hiring mistakes home inspectors make on a regular basis (there are lots more that we will address later).
Hiring your friends (or family)
Your friends and family don’t always pay attention to what you have to say or how you want things done because they are your family member or friend and don’t necessarily look at you as the boss. Employees that are not your family or friend understand that they have to do things your way or they will be terminated from your firm. Sadly, in many cases your friends and family are the worst hires you can make. If you fire your family member, the holidays can be really tough on you! ;-(
Hiring someone who doesn’t have good computer skills
Today, in the home inspection business we’re high-tech. If perspective employees can’t use today’s hardware and software they are a dinosaur and you don’t that type of person in the firm. Why would you want to be forced teach someone all about computer hardware and software when you could hire someone who is already computer savvy.
Adding employees or subcontractors if you have no Worker’s Compensation Insurance
In most states the law requires that you carry workers compensation insurance if you have three employees or more. However, what it doesn’t say is that regardless of the number of employees that you have, if a subcontractor or employee gets injured in the course of employment, you are required to pay their medical benefits, lost wages and heaven forbid death benefit. So, if you have one or two employees you still need Workmen’s Compensation insurance so that you can transfer the risk to the insurance company. Paying out of your pocket for employment related injuries can put you out of business.
Not getting the non-compete or non-solicitation agreement signed before the inspector training
Everything that you want the inspector to do needs to be done in advance of the inspector coming on board. If you allow an inspector to come on board without having your non-solicitation or non-compete agreement signed you’re in real trouble. Do you think the employee will sign that type of onerous agreement after the fact? Once an employee gets into the firm and is adding value they know you are less likely to force them into signing the agreement.
Note: Success in the the home inspection business is not a straight line. You may make your first hire or additional hire and it doesn’t work out for whatever reason. If that happens, determine what went wrong and then see how you can prevent those mistakes from occurring again in the future.
Learn more about whether or not your new hire should be classified as an employee or independent contractor. Steve Brewer, CPA, Savvy Inspector Partner Vendor shares the IRS’s 20 rule test information.