| Friend,
Last week I discussed the pros and cons of having minimal staff in your dojo, and I also discussed the plus side of having a larger staff.
Today, let's talk about the cons of having a large staff in your dojo.
By now most of this should be obvious, but I'm going to list these negatives just the same. That way you can have a complete picture of the challenges you may face if you decide to staff out your dojo.
OVERHEAD COSTS
Let's start with overhead. By far, the biggest issue with having a lot of staff in your dojo is the increased costs related to payroll and taxes.
Of course, the biggest expenses are the actual wages you have to pay your employees. Good employees don't come cheap, and keeping them for the long haul means you're going to need to increase their pay as time goes on.
Then, there's also overtime pay, which you are mandated to pay hourly employees if they work over 40 hours a week. Of course, you can just put your employees on salary, but that only makes sense for certain positions in your dojo.
And did I mention that you have to pay a portion of their Social Security and Medicare taxes? Yes, you have to collect and withhold their income tax, Social Security tax, and Medicare tax, and you also have to contribute to their Social Security and Medicare out of your own pocket. These contributions aren't a lot for one employee, but they add up over time.
In addition to wages and taxes, you might also have to pay state and federal unemployment taxes. You also need to have worker's compensation insurance for your employees as well (that's federal law in the U.S., but the states administer it so how you report it varies from state to state).
Then there's the actual costs of hiring and training a new employee, which can run in the thousands when you consider that a new hire is basically worthless without training. That means for their first month or two, you're going to be doing their work and yours while you train them. (Hire right and this period will be much shorter - more on that later.)
And, there's also the costs of drug testing and background checks, which you should do on all your employees, especially if they are going to be driving a company vehicle or if they are going to be around children.
Finally, your marketing costs are also going to be higher, because it costs more to attract and keep enough students to keep all those employees busy.
All told, when you have a large staff you can expect your payroll and associated costs to eclipse your rent and other overhead costs and then some.
Now, I know this is a lot to consider... and I haven't even started talking about other negatives to having a large staff.
But, I'll save that info for tomorrow's email.
Until next time,
Mike Massie MartialArtsBusinessDaily.com
P.S. - If you think you can just hire all your staff as contract employees to avoid all the mess I describe above, you're crazy. Eventually, it will catch up to you and the IRS and/or department of labor in your state will not only fine you, they'll also make you responsible for any unpaid taxes on your employees wages.
P.S.S. - Having a large staff isn't all bad - if you hire right and train them well. I'll talk more about how to do exactly that later in this series.
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