crazy employee costs

[Pekka]

Hey guys.

So I didn't the job I was interviewed last time. It would've been sweet, but I lost to a guy who has lots of stripes. I gained a bit notoriety in the scene by ranking so high, which is sort of amusing. Still sucks to lose though.

That means I'm back in business. That sucks even more. What kind of employee costs do you guys have? In here, I want to employee one person more this next year and it'll cost like... say I want a developer. I got a talented guy at my sight so it's not cheap (relative term), say 4k minimum because he is also very young and we've got interesting projects and he is in our network already. Can't keep him forever but say 4k, how much does it cost for you? For me, after the state has raped me, it'll be closer to 8k. That's only salary and mandatory payments.

If I was working for a Uni (got called one day if I was interested - I was NOT interested), the side cost multiplier is 4 these days. Say, we pay some guy 3k to do research, it'll be 12k a month in all costs. Can you dig it? For traditional public sector job the multiplier is closer to 3, so 3k guy makes 9k in mandatory expenses.

It is no wonder no one is hiring and why money is wasted on just about every single employee.

Just one example. This came to my mind after today I was thinking how I want to spend some money, because the fiscal year is about over so state rapists are comign to collect their 26 % tax on your profit. Say you have 1m revenue, from that 100k is profit, 26k goes to state when New Year hits your clocks, just because. It doesn't really chew from the competitive edge of big companies because they DO NOT pay that tax, they have "ways". Small businesses such as myself can't get away from it though. We have to decide if we lose quarter of our profit in a single day and have that money for the next year as well, or how much we want to keep. Based on that, we get the number we need to spend on just about anything. I'm thinking of buying 5 iPads and just giving them to homeless people. Call it charity through taxation of my choice. Countries don't make sense. I realize taxing is important but damn, will someone think of children and small business people? It's killing everyone here. No one gives a **** about small companies. Except when it's election time, then again none of those folks have ever really tried anything but talk lies to voters all their lives.

I mean damn, we risk everything every day, the state takes but it doesn't come in aid when the risk won't pay off. That, plus we try to make something out of nothing. Sort of not play the zero sum game. I guess that's a salary in itself. To say to yourself that at least you're trying to contribute. Can you tell I had a bad month? Dropped record number of quotes and closed none. Back to the drawing board.

[notyoueither]

Keep on truckin', Super Citizen.

[Kidlicious]

You want to employ another person so I assume you already have the sales, right? Is it possible to raise prices, or cut costs?

[Pekka]

You want to employ another person so I assume you already have the sales, right? Is it possible to raise prices, or cut costs?

Yeah we have sales. Both options not really possible, only option is to sell more which is fine, we are scalable enough to go for more customers (and should). It's just that we need that certain skill set ASAP, regardless of what we make. We're diversifying and don't have the talent yet for this particular issue.

No one said it would be cheap though. It raises the risks so high though, don't want to fire anyone because I couldn't make enough action, plus our customer segment is particularly slow in their decision making and cycles of doing anything. Basically one step from the government itself. Once you get them, they're great customers and predictability is high, but otherwise you're chasing the dragon and never really know.

[Kidlicious]

Maybe you have to make less profit or even take a loss for awhile. Do you have cash? Just suggestions. You probably know more than me.

[Zoetstofzoetje]

what you need to do is circumvent that corporate tax rate. mine is effectively 0.

there are hidden costs though. first of all, setting up an off-shore route (or something similar) adds another layer of administration, and perhaps your company´s legal structure has to be amended. second, you would need better lawyers than the ones you probably have right now - gotta mould this into your customer contracts.

another route is saving on employees. if they work at your off-shore instead of your local company (in a legal sense) you can save on social security, because private insurance tends to be cheaper (at least here).

[Hauldren Collider]

I wouldn't trust a word of what zoe says about tax arbitrage, given his massive tall tales about his so-called business and so-called PhD in the past.

[Pekka]

I figure it would be possible (in theory) to circumvent money flow from employee cost in ways but I think they are risky, and probably not worth it considering the control mechanisms in here are pretty tight. This is to say that setting up off shore place, I'd have to literally send the employee there as well, because the information the tax man gets is integrated. Our local IRS has fairly intrusive information collected because it offers services to companies and individuals, and all the instances report directly to IRS, from social security services to employers to hospitals. As an employer, I could skew this a bit but it would hurt employees at the same time so I wouldn't do it. Also, we're setting the company up for sale in the next 4 years and have a decent accountant company and auditors so we can't cook the books if we want some value from this. Has to be clean and nice.



Kid, Yes I think that's the only option. Just not enough cash for myself but it's still the best option at the moment. Just have to have a slow burn rate, which we do.

[Kidlicious]

The best part of Z's post is where he tells Super Citizen that he needs BETTER lawyers.

[pchang]

In the US, the cost multiplier for Taxes, etc. is about 1.4. However, to get a programmer companies have to provide benefits like health insurance, vacation, etc. Once you include admin costs and rent into the picture (all overhead), your multiplier is more like 1.8 - 1.9 if you are running a tight ship. At many companies, the multiplier is between 2.0 - 2.3 because of excessive overhead or better benefits (companies like Google and Facebook provide free food to all employees and visitors). University multiplier of 4 is the same in US.

[Pekka]

In the US, the cost multiplier for Taxes, etc. is about 1.4. However, to get a programmer companies have to provide benefits like health insurance, vacation, etc. Once you include admin costs and rent into the picture (all overhead), your multiplier is more like 1.8 - 1.9 if you are running a tight ship. At many companies, the multiplier is between 2.0 - 2.3 because of excessive overhead or better benefits (companies like Google and Facebook provide free food to all employees and visitors). University multiplier of 4 is the same in US.

Damn multipliers... company costs in here didn't include all the expenses, mostly just mandatory ones. Then add vacation and all that good stuff. However, I don't like to complain about paying good people, they deserve all they get and frankly would deserve more if we could pay more. Sometimes I think most people don't really get how not-easy it is to do this, how much pressure can actually be upon one with the realization of "we can't pay anyone if this fails". As we have pretty much bootstrapped our company and have no loans what so ever, we used our own money and are 100 % customer funded, you can say we have many things right that others have wrong.

ALL I'm saying is I need my medical MJ and I need it now, I'm stessed up and I have a real medical condition and damn it if we don't have anymore wine left. I have to get up really early tomorrow and have tons of todo's and I don't know how I can shuffle between all the chaotic vortexes created but hey, screw it. We live only once. Better go down in a spiral of anguish, pain and complete misery but not worrying about "I never tried, so I never know", than take the normal path of living somewhat comfortably and making progress that helps no one. That's an easy choice. What I don't understand so well is how some people see the second option as the easy one and the obvious thing to do. We have too many first world problems.

The point is, I need more wine, I need my medical drugs for real and can't get it, I need to do a triathlon next year but I'm still sort of fat. I love life but I'm not sure if it loves me back. I tried punching it, it didn't help, so now I'm trying to ignore it instead and embrace all the controversy. I've noticed that "do the exact opposite" is often the very best way to go and gets us ahead. SO here on out I'll try to implement "do the exact opposite" as often as possible. Maybe I will become immortal as a result. Now! More wine. So early wake up tomorrow

[Kidlicious]

It's better for me to be content. The Bible says some will sow and others will reap. I hope your company does well though.

[Kidlicious]

dp

[The Mad Monk]

Just to be clear, we are not discussing the costs associated with crazy emplyees, correct?

[Pekka]

What is correct is that I need more wine and all kinds of other medicinal things. That's for sure.

and the damn euro is breaking apart too, not that it would not deserve to burn, but ... I mean people are getting tense, people aren't too eager to buy, which is bad for the business. I think I need to apply for some more jobs.