This is part five in a five-part series on starting a contractor business. To start with part one, please go to this page.
Now that you have your new contracting business up and running, have your legal and insurance requirements in place, and have learned your way around the marketing landscape, you might find that you’re becoming too busy to handle the workload on your own or with your existing team. It’s time to consider hiring some help, but where do you look for qualified professionals? What legal and accounting implications exist when you hire full- or part-time employees, and how can you make sure that you’re putting the proper protections in place for both your company and your employees?
We’ve created this comprehensive guide to hiring help for new contracting companies. As a growing company, it can be challenging to navigate the many legal and financial hurdles that exist along the way. After all, you’re busy marketing your company and servicing clients; you probably don’t have the time to take a course on hiring practices or human resources.
This guide covers everything you need to know about hiring help, from the pros and cons of starting out as a solo contractor to knowing when it’s time to hire qualified workers, where to seek out the most talented prospective employees, essential need-to-know information about managing a team, and the administrative requirements you need to know to keep your records and financials in check.
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On This Page:
- Solo Contracting: Pros and Cons
- When to Hire Help
- How to Find Qualified Applicants
- Qualifications to Look For
- Hiring Friends and Family
- Managing Staff
- Administrative Requirements: The Basics
Solo Contracting: Pros and Cons
As a new contractor, you may start out working alone. For small jobs and repairs, working solo can be a good option when first getting started as you don’t have to deal with the hassles of setting up a payroll system, payroll taxes, and other legal and accounting headaches. But as your company grows and you begin to receive larger remodeling or construction projects, working alone becomes much more difficult – not to mention unsafe.
It’s always a good idea to have someone around as a spotter, who can help with tasks such as steadying a ladder or handing you the right tools so that you can get jobs done more quickly. But when you’re ready to tackle major renovation projects, you’ll likely find that having a few qualified construction workers on staff who are able to handle more complex tasks is the only way to ensure customer satisfaction and get your projects to completion within a reasonable time frame.
Of course, if you’re specializing in smaller, single-man jobs and minor repair work, working solo can be a long-term possibility. What’s right for your business depends on your workload and project pipeline, project complexity, and your ability to fund ongoing payroll.
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When to Hire Help
How do you know when it’s time to hire employees? The obvious answer to that question is when the workload becomes too much for you to handle on your own. But it’s not as cut-and-dry as it seems. There are many considerations to weigh when hiring help. The following resources offer insights on determining whether you can afford to hire a full-time employee, deciding what position to hire for first, and other options if you’re unable to afford full-time help.
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Look at the total estimated cost of hiring an employee for a full year. This article explains that it’s important to consider your profit margins and the total cost over a year to determine if you can afford to hire a full-time employee. The last position you want to be in is one in which you can’t make payroll. If your financial picture makes it impossible to hire a full-time employee, there are other options to consider.
Determine what position you need to fill first. For instance, it doesn’t make sense to hire a marketing specialist if you have too many projects to handle on your own as it is. In this case, you should consider hiring hands-on skilled workers who can help manage the existing workload before bringing on employees whose purpose it is to bring you even more business. Or, as this article suggests for smaller companies, look for a flexible employee who can wear several hats as needed.
If it’s the administrative side of running your business that seems to be weighing you down, you could hire a virtual assistant to manage your books and handle scheduling. This is a more affordable option for some new contracting companies that can’t yet take on the responsibility of hiring a full-time office worker.
Some construction companies choose to subcontract work rather than hire direct employees. This article compares subcontracting vs. hiring and outlines the potential pros and cons of each approach. Subcontracting can be a viable option for you if the scope of a project is too broad, for instance, and it can free up your time to focus on other aspects of your business such as marketing and growing your company.
How to Find Qualified Applicants
If you’ve decided that now is the right time to hire an employee, your next concern is how to find the most qualified applicants. From posting the right job advertisement to interviewing well and how to set your pay scale to attract top-quality workers, the following resources offer everything you need to know about digging through the talent pool to identify top-tier talent.
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The right job posting is the first step to hiring employees who are the best fit for your company. This article outlines the steps for finding the most qualified contracting employees in your area, including advice for writing compelling job posts that bring the most qualified, reliable applicants to your doors.
Where you post your job ads has a big impact on the quality of the applicants you receive. There are some industry-specific job boards in construction and other contracting specialties, as well as general job boards. The best bet is to experiment with various job boards and advertising options to find what platforms result in the most quality applicants.
Industry events, online groups, and your company website are also good outlets for recruiting top construction talent. If you’re attending a local construction trade show, for instance, you might meet candidates who are actively seeking new positions.
You may have to offer a higher salary or hourly wage to attract the most qualified construction workers, particularly if there’s a labor shortage in your area. As this article points out, paying a higher wage often pays returns through more satisfied customers thanks to the quality of your work and the ability to complete projects within budget thanks to skilled staff.
Create a list of potential interview questions before you bring potential employees in for a face-to-face interview or a phone interview. This resource offers tips for hiring top employees and how to navigate the interview process, ensuring that your questions don’t pose any problems with Equal Opportunity Employment (EOE) laws.
Qualifications to Look For
The following resources offer information and advice on the most important qualifications to look for when hiring help, such as when to give integrity and reliability more weight than hands-on skills and the pros of hiring from different demographic groups, such as veterans and millennials.
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Retired veterans often make excellent candidates for construction work. This article points out that, “According to the Bureau of Labor Statistics, construction employment is expected to grow by 1.84 million jobs or 33 percent by 2020.” The article outlines the benefits of and tips for hiring veterans, including the need to go beyond a standard help wanted ad.
You might also consider hiring millennials for construction work. This article provides valuable tips for attracting qualified millennials to your company.
Always conduct pre-employment background screenings. As a contracting company, your employees will be working in your clients’ homes and places of business. This article offers tips for hiring trustworthy employees. As this article points out, educated clients will be asking about the individuals who will be in their homes or businesses performing the actual work, so having the confidence to assure your clients that you’ve hired only top-quality professionals is essential.
The integrity of a potential employee is just as important as their hands-on skills – sometimes even more so. This article offers several valuable tips for hiring employees, including the recommendation to carefully consider an individual’s personal values, reliability, and honesty in addition to the hands-on skills that are applicable to the job. Skills can be taught; integrity cannot.
Craft a detailed job description for the role that you’re hiring for. This example from Study.com is a comprehensive job description for a construction manager. Using examples and comparing your job description with other job ads will help you fine-tune your approach and identify the most important characteristics to seek in a candidate. This resource outlines many potential responsibilities for construction laborers.
Education and experience are other considerations for construction workers. Determine what education threshold you’ll require as well as years of experience and know how much you’re willing to flex on these stipulations for the right candidate. These qualifications will help you weed out resumes for applicants who meet your specifications.
Hiring Friends and Family
The issue of hiring friends and family is one that nearly every new contracting company encounters. Whether your cousin is laid off and seeking part-time work to supplement his income or your brother-in-law wants a full-time job with benefits, you’re likely to encounter family and friends who express interest in working with you. These arrangements can go extremely well or turn out very bad. The following resources offer information on navigating the choppy waters of hiring family and friends.
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Hire friends or family members only when they’re a good fit for your company. As this article points out, friends and family who approach you for work are probably seeking any work, not work specifically in the construction industry or in your area of specialty. Avoid the temptation to hire a friend or family member who is truly unqualified to work for your company just for the sake of ‘helping them out.’
Potential conflicts that may arise between you and friends or family members whom you’ve hired can damage your company’s reputation and lower company morale. This can be particularly tricky if you have several employees and other employees feel that you’re giving your family member special treatment or become discouraged about multiple conflicts between you and their co-worker. Make sure that parameters are clearly defined and consider a contract to avoid potentially damaging legal disputes if you decide to hire a friend or family member.
On the plus side, you’re probably already familiar with your family member’s or friend’s strengths and weaknesses, and you may not have to run a background check before hiring them (although it’s a good idea to keep the process consistent for all potential hires). This article points out that family members may have a stronger sense of obligation and therefore be more willing to go the extra mile for the good of the company.
In addition to your own friends and family members, you should also use caution when hiring friends or relatives of your existing employees. Conflicts between two employees who are related or have a pre-established friendship can be just as damaging.
Favoritism, cronyism, and nepotism are all serious potential concerns when you hire a friend or family member. This resource explains these three terms and what you need to know about these potential problems before making a hiring decision.
It’s much more difficult to fire a family member than it is to fire an employee with whom you’ve had no prior relationship. If you have to spend time with this individual at family functions or events outside of the workplace, things can be awkward if you’re faced with a situation in which you have to terminate this employee.
If you do hire a friend or family member, if possible, arrange it so that they report directly to someone else (not yourself). This can alleviate some potential concerns that arise from family members feeling disgruntled about having to ‘take orders’ from you or any feelings of decreased accountability that could arise from them reporting directly to you.
Once you’ve brought an employee (or several) on board, great leadership is essential for building employee loyalty and fostering a positive company culture. This in turn inspires your team to want to do the best work they can for your customers because they care about your company’s reputation. These resources provide helpful information on effective management and leadership.
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Hiring new employees means that you’ll need a strategic plan for effectively assimilating new workers into your company. Whether your employees are new construction workers or have decades of experience in the industry, every company is different. Solid onboarding techniques help to ensure that new employees mesh with your existing team and are better able to serve your clients in the same way that you would.
Motivation has a major influence on productivity in the construction industry. As the company’s owner and leader, it’s up to you to foster a positive atmosphere that motivates your staff. This article offers tips for motivating your employees.
Effective communication coupled with relevant intrinsic and extrinsic incentives for employees are the best strategies for motivating your team and increasing productivity. “This paper concludes with two methods suggested by previous researchers to improve motivation of construction workers: (1) relevant worker incentives (intrinsic or extrinsic) and (2) improved management practices, specifically regarding communication with workers.”
Project management strategies are useful for keeping your company organized and effectively outlining the tasks involved in each project, duties and responsibilities of each team member, and overall project schedules. Whatever project management system you use, it should serve as a guide from project inception to completion and streamline the overall process of completing projects within budget and on time.
If you work with subcontractors, a Scope of Work (SOW) is a guide that details specific project requirements and responsibilities. The SOW keeps both you and your subcontractors on task and clarifies task breakdowns and responsibilities so that concerns that arise after the fact can be easily mapped to the responsible party.
Your goal as a construction leader is to cultivate job satisfaction, motivation, and effectiveness among your team. There are various approaches to motivating staff and cultivating job satisfaction; this article outlines the key considerations in becoming an effective construction leader.
Good recruitment practices mean that you’re hiring the best fit for your company, which makes your job as a project leader much easier to manage. This article discusses seven steps to building effective construction teams.
Administrative Requirements: The Basics
Hiring help doesn’t end with completing interviews and making a job offer to your top candidate. The task of administrative management of payroll and tax reporting is only just beginning. These resources offer essential information on managing payroll, HR concerns, and the administrative basics you’ll need to know to stay well within laws and regulatory requirements.
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While hiring employees means that you must have adequate workers’ compensation insurance to cover any on-the-job accidents that may occur, it’s also a good idea to keep this in mind during the hiring process. As this article explains, “In addition to standard questions about qualifications and certifications, ask prospective employees about their off-the-job habits. How often do they wear seat belts? When’s the last time they received a speeding ticket? It’s also often beneficial to run a background and credit check, and to ascertain whether potential employees have filed other workers’ compensation claims.”
You’ll also need to verify potential employees’ eligibility to work in the United States. This guide from the Small Business Administration (SBA) details how to determine eligibility and provides valuable information on the administrative demands of the hiring process.
Unemployment insurance is yet another requirement for small business owners who hire employees. This protects your company financially by covering unemployment claims when a former employee files a claim against your company.
When you hire employees, you’ll need to withhold payroll tax from their paychecks. This resource explains the basic requirements for designating a worker as an independent contractor or an employee, as well as information on payroll taxes, subcontractors, and other valuable information for contracting companies. The IRS offers an abundance of information regarding employment taxes and what employees and employers are responsible for.
Payroll will become an ongoing function for your business when you hire your first employee. This helpful guide explains essential need-to-know information about payroll.
Know the difference between independent contractors vs. employees. There are tax implications of choosing the wrong designation for your workers. Independent contractors are responsible for paying their own taxes, but you as an employer must withhold payroll taxes from the paychecks of employees. However, you can get into legal and financial hot water if you incorrectly designate employees as independent contractors in order to avoid the hassle of withholding payroll taxes.
Software can help with many administrative aspects of managing employees. Scheduling software, for example, can be helpful in reducing the time it takes to schedule your staff and ensuring that your crews are sufficiently staffed with the right people (and the right skills). There are several specialty software applications for contractors to help manage payroll as well such as Penta and contracting solutions from QuickBooks.
Hiring your first employee is a big step, but making the right hiring decision and having all your administrative tasks in order can be a huge relief for busy solo contractors. Once you’ve assembled the right team, you can focus on the task of running your company and providing strong leadership as your company grows.