[curiouspainter]

So I have a big decision to make soon. I have been offered to work for a painter that I know and respect personally and professionally. His business is rapidly expanding and he has tons of work for me.We have discussed different ways for this to look, but the most attractive to me is to work as a full-time W2 employee.

I have been painting about 7 years total and the past 2 years with my own company (primarily solo)...around 70,000 revenue on average in my two years. So I have a variety of customers, a mix of friends/acquaintences (perhaps 30 percent) and other customers that I have aquired along the way...realtors/remodelers/customers referred by customers/other painters, etc. So a hodge-podge.

I'm wondering what this trasition looks like, what to consider in the process. Basically, the painter that I'll be working for mentioned that I could still work for these customers and that it would be under the banner of his company. He's open to perhaps "purchasing" these contacts/connections I believe. My invoices and estimates have been through Quickbooks. And I contact through email/phone as well.

Side note: I brought up the discussion of "side work" in an open-ended way, as I feel that is important to clarify. My general thought and the vibe I get from him is that that's not cool. I've seen it too much from others....people working weekends on their own side work consistently and being burned out and their performance suffering because of it.

Overall, I am feeling good about moving forward with working W-2 for him. And in spite of some emotional attachment to my customer base, I'm open to transitioning (perhaps with them) under the banner of this new company. And I'm looking for feedback on how best to do this and what to consider.

Hmm...and in this situation, are there any actions you would suggest taking to dissolve my company or how/what to hold on to?

 

[jacob33]

I think if you want to be an employee be an employee. If a past customer calls, you can refer them or introduce them to the new company. If new company has finders fee for bringing in customers great, if not so what your still paid for your work.

As far as side work that is always interesting based on state laws. Some states allow for non compete contracts others do not. My opinion is if you have your own tools and truck and you paint a room on a saturday that your not working thats your business. I would not talk about it and as long as your work still meets standards and production at the current company it should not be an issue.

 

[RH]

To me, giving up the freedom to make my own decisions would be the biggest item to consider.

Make no mistake, you will be an employee, no longer an independent contractor. As such, any business you would draw to the company by way of former customers, friends, relatives, etc., would be under his control. He‘s paying for any licensing, insurance, and bonding - not you. Plus the bidding and paperwork are on his shoulders now. You either decide to be under his control - or not. You really can’t expect to have it both ways. I don’t know of any contractors who would be fine with an employee cherry picking jobs on the side.

 

[jacob33]

I did side work when I was an employee. I bought completely separate tools as my employer supplied all tools for his jobs. They were small jobs that I could complete in a weekend. I did not tell anyone and just did it. Personally I see nothing wrong with that but I'm sure many disagree. I did always put my main job first though. If weekend work was required there than I did that. Oklahoma where I live has virtually no license requirements for painters just $40 city business license. Obviously do everything legal and above board but I always figured if I was not on the clock what I did with my time was my business. Obviously if my employer wanted to fire me for it that was his business so be careful.

 

[RH]

I did side work when I was an employee. I bought completely separate tools as my employer supplied all tools for his jobs. They were small jobs that I could complete in a weekend. I did not tell anyone and just did it. Personally I see nothing wrong with that but I'm sure many disagree. I did always put my main job first though. If weekend work was required there than I did that. Oklahoma where I live has virtually no license requirements for painters just $40 city business license. Obviously do everything legal and above board but I always figured if I was not on the clock what I did with my time was my business. Obviously if my employer wanted to fire me for it that was his business so be careful.

Dis you carry your own insurance and bond?

 

[RH]

It has been a long time since we had employees but when we did, we had a strict policy against them doing side work. To us, loyalty was big thing. We tried to treat our employees right with not only a fair wage but with health insurance, profit sharing, and overtime. And by doing that, we felt we deserved that loyalty.

We saw any job an employee took on the side as potentially one less our company might end up getting and doing. That not only potentially hurt the company, it hurt the other employees, and thereby all of our families.

Of course, there was no guarantee we would have gotten the jobs an employee took but if they undercut us on the side because they didn't have to factor in the necessary business expense like we did, then we were pretty much assured not to get it. To us, having an employee doing side jobs was like being in competition with a fly by night contractor who never had a license, insurance, bond, or many of the other associated business expenses to deal with and thereby competed on a very unlevel playing field. There was also the factor of having an employee who was working all week for us, and then for themselves on the weekend or evenings, not being as physically prepared to give us their best during the normal work week which we were paying them for. For those reasons, we felt what they did along those lines in their spare time WAS our business because it could certainly negatively affect our business.

As Jacob 33 said, if an employee wants to fire someone for working on the side, they shouldn't be upset if and when it happens. And it will be completely justified IMO.

 

[jacob33]

Painters are not required to be bonded in Oklahoma or general liability insurance for that matter. Workers comp is required to have employees. I did have general liability. I still do not carry bond but I'm a small company doing small jobs so its not really needed based on my understanding of it. Again I see both sides of that coin with side work. I perfectly understand where you are coming from on that. It never bothered me if my employees worked side jobs as long as it did not effect them on the job for me. Hope we have not derailed the thread to much but my advice would be to the original poster is if you want to be an employee than go do it and be the best employee you can be.

 

[curiouspainter]

Painters are not required to be bonded in Oklahoma or general liability insurance for that matter. Workers comp is required to have employees. I did have general liability. I still do not carry bond but I'm a small company doing small jobs so its not really needed based on my understanding of it. Again I see both sides of that coin with side work. I perfectly understand where you are coming from on that. It never bothered me if my employees worked side jobs as long as it did not effect them on the job for me. Hope we have not derailed the thread to much but my advice would be to the original poster is if you want to be an employee than go do it and be the best employee you can be.

 

[curiouspainter]

I get a lot of thoughts and have a hard time narrowing them down. My primary desire is to better understand what ya'll think about how referrals/selling contacts, etc. could/should look like? What to expect? What is fair?

And regarding the side work, I have a hard time understanding it from a competition perspective. I do a small amount of work, and if an employee, it would be much smaller still. I live in a big city where there are hundreds of thousands of people. Perhaps if you live in a small town, this would be a different story. I truely think many of us come from a scarcity mindset which is unnecessary. Our commonalities, questions, sharing of techniques, strategies, labor, insecurities, interconnections and goodwill are much more valuable than being protective and insular I feel. In my hood and painting community, a phrase is put out there called coopertition which I love.

Where I do see it as being a particular issue is regarding being tired/drained/less effective overall if side work is picked up. And in all this, we have a good deal of mutual respect, and this is an open conversation. Likely, I won't pick up side work and if I do, it will be an agreed upon thing...just thinking it all out and it is a new development to start adopting this new employee mindset.

 

[RH]

I get a lot of thoughts and have a hard time narrowing them down. My primary desire is to better understand what ya'll think about how referrals/selling contacts, etc. could/should look like? What to expect? What is fair?

And regarding the side work, I have a hard time understanding it from a competition perspective. I do a small amount of work, and if an employee, it would be much smaller still. I live in a big city where there are hundreds of thousands of people. Perhaps if you live in a small town, this would be a different story. I truely think many of us come from a scarcity mindset which is unnecessary. Our commonalities, questions, sharing of techniques, strategies, labor, insecurities, interconnections and goodwill are much more valuable than being protective and insular I feel. In my hood and painting community, a phrase is put out there called coopertition which I love.

Where I do see it as being a particular issue is regarding being tired/drained/less effective overall if side work is picked up. And in all this, we have a good deal of mutual respect, and this is an open conversation. Likely, I won't pick up side work and if I do, it will be an agreed upon thing...just thinking it all out and it is a new development to start adopting this new employee mindset.

To be clear, my perspective is from a smaller town where the painting contractors tend to run into each other quite a bit. Even so, I have friendly relations with most of the other outfits in town and send them work we are not interested in or where the scope and time requirement is above what we want to do. We have even teamed up with other outfits to complete larger jobs.

In Oregon, you are required to be licensed, insured, and bonded. So if an employee is going out to do work on the side without those same qualifications met, it does come across as a lowball outfit out there taking away work. And it's not so much the size of the jobs they are doing, but more the principle that they are working without meeting the same requirements the "legitimate" outfits are having to meet and therefore competing unfairly.

Side story; did a painting job as an independent contractor for a home remodeling firm a number of years ago. They didn't even want me to speak with the HOs which was silly IMO. Months after finishing the job, the HOs call me up and ask me to come bid another part of the house for some painting. Did so, landed and did the job and moved on. A few months later I get a call from the owner of the remodeling company mildly chewing me out for having taken on the painting job without consulting them. Now, I totally disagreed with him on that. One, I was an independent - giving my bid to the HOs without running it through the GC (something that never even occurred to me) saved the couple 20% - the amount the GC would have tacked on for doing absolutely nothing - except sending them a bill. Two, although the initial contact with the HOs was through the construction company, the owners got to like me and my work for what it was. Three, if something like this had happened within a few weeks of my initially doing work for them, I might have understood. But eight months later - and in an area totally unrelated to the earlier project? Sorry, not buying it. Just sharing this to point out how outfits can be pretty touchy about ANYONE at anytime making more money on a job without them getting their cut.

 

[kmp]

When I had employees and they did side jobs there was very little I could do except fire them, which I did not have to do. I had reached a point in the size of my business that many of the side jobs they did were too small for me to mess with and were not profit generators.

 

[stelzerpaintinginc.]

What are your main reasons for wanting to transition to an employee? If you've had a legit biz for 2 years and are making a living, what areas do you expect to see improved by working for someone else? I could totally understand if you just weren't able to acquire enough business, or maybe you just hate the paperwork, office & admin side of it, (I know I do). I'm sure it could work, don't get me wrong, just hard to see the reasoning behind it.

 

[curiouspainter]

It will simplify my life. I will feel less stress. And I will be able to devote additional time to people and hobbies/interests outside painting. I've been on a track to grow and expand my business, but this takes a whole lot of work and risk. I'm content setting that aside for now, especially as I trust and value the person I'll be joining as an employee. If at some point, I decide to resume my own business, I know that's an option.

 

[MikeCalifornia]

I'm transitioning an employee similar to you but with more connections. He is now my employee and like to do side work, but is realizing that working Saturdays and Sundays eat into his free time, as he is Monday to Friday with me, and the job has to be small and decent money to want to do it. We have worked out a deal where as he brings me any jobs that someone has contacted him for, I go and meet the person, take measurments, then bid the work. If I get it, I pay a 5% bonus to him. I thought it was a nice sweet spot for him and it doesn't hit my pocket too much for extra jobs that would not have called me. First job is an exterior for $8750, so $480 for him.

 

[jwp]

Do the side work as it comes and dont feel guilty about it, keep contacts with your customers in case it doesnt work out.

 

[Holland]

It will simplify my life. I will feel less stress. And I will be able to devote additional time to people and hobbies/interests outside painting. I've been on a track to grow and expand my business, but this takes a whole lot of work and risk. I'm content setting that aside for now, especially as I trust and value the person I'll be joining as an employee. If at some point, I decide to resume my own business, I know that's an option.

Seems like you answered your own question.

Work for this other guy.
Don't take any side work.
If it doesn't work out then you can go back to your own thing with no harm done - might even pick up a few things working for someone else for a while.

*regarding your clients. If they call while you are working for him, pass on the information about your new position. Otherwise, let it be, and see how things play out.

 

[Peanut]

It will simplify my life. I will feel less stress. And I will be able to devote additional time to people and hobbies/interests outside painting. I've been on a track to grow and expand my business, but this takes a whole lot of work and risk. I'm content setting that aside for now, especially as I trust and value the person I'll be joining as an employee. If at some point, I decide to resume my own business, I know that's an option.

I have the exact opposite point fo view. Being my own boss allows me to lead as simple, or fast paced, life as I choose. I recognize running your own business isn't for everyone, but I don't think I would trade my autonomy for anything now.
I see no downside to being 1099'd, especially if you still have clients calling you. Profit should be way larger when a client calls vs. an hourly wage, and you can take as many, or as few, as you choose.
"Those that sacrifice freedom for safety deserve neither." Tighten your belt and be someone who you would look up to. Your future self will likely be glad you did. Just my 2 cents...

 

[pghsteve]

We used to not let our employees do side work, but it wasn't worth the fight. Now we do. If we find out that anyone does side work that is stolen from us (connected in any way to one of our existing customers) we fire immediately for theft. That being said.... I like employees better who I feel are dedicated to the company, not constantly trying to work around commitments they made to others. On the rare occasions we ask someone to work a weekend, we really need it. When employees start lying b/c they don't want to admit they're putting side work over OT with us...I feel pretty sour. That employee is most likely limiting his future with us (concerning advancements...not that we'd fire him over it).
On your real question... If you're doing 70k a year, by the time you pay for paint and vehicle expenses, insurance and other expenses -- you're not making enough money to justify the stress of running a business. Not knocking what you're doing.... I respect the effort and know that the draw of being your own boss is attractive... but its just math. You can make better money getting 20-25/hr from an employer, especially if there are any benefits at all and the ability to work OT. If the new company gets you consistent 40 hr weeks, I'd agree to not do side work. If they don't, they should agree to allow it with no hard feelings. Closing your business is a form with the state (which may not even be necessary) and a few phone calls to close any accounts, discontinue insurance, etc. I'd ask the new employer to give your a reasonable offer on your equipment (why hang on to it... go into the new venture with every intention of making it work. It sounds like you have an open, honest relationship with the new employer). sell your van, your pumps, ladders, etc. Put some money in your pocket and let him carry the load.
Your customer's do have value. I would suggest to the new employer that if you give him a list of all your existing customers and promise him to refer everyone who contacts you, he give you 10% gross off the top of each sale to them for some amount of time.... 2-3 years would be reasonable. He can just add 10% to the bid price, it won't cost him a penny. He grows his business, your customer's are taken care of with no noticeable additional cost, and you get some value for what you're built. Win/Win/Win. If you push him 70K a year, it would be reasonable to think you'd end up with 7k in pre-tax commission.
You will have a more enjoyable life as a W2 employee if the employer is good. Maybe you can become a foreman for him, still giving you decent autonomy and helping him have a stronger business in turn. Good luck! Let us know how it goes.

 

[Packard]

A friend of mine owns a tree surgery business and has about 8 employees. They are often on the job unsupervised by him as he runs more than one job at a time. Often times neighbors will introduce themselves to the arborists and ask them to do a job for them on "their own time". If they take that job my friend considers that stealing. They are getting the job based on his company's reputation, not on theirs. The job should have been referred back to him for quoting.

Since you are bringing in people that you know, rather than banking on the contractor's reputation that would not quite apply. I would ask for a "finders fee" if they contact you at your previous business.

 

[CApainter]

Going from an owner of a painting company to an employee of a painting company would be considered a demotion on the scale of career advancements. It may be time to look into another vocation.

I also agree that accepting work on the side without your employer knowing about it, is unethical work behavior and should be subject to disciplinary action.