Switching from independent contractors (ICs) to employees can be a challenging process to execute no matter what industry you are in. It is especially tough for the pet sitting and dog walking industry because they are often small businesses, they have limited funds, and little advisement or support from experts.
Luckily for you, that is where I come in. In an earlier blog, I told you about the major shifts in our industry. One of them is businesses switching the classification of workers from ICs to employees in droves. Many are afraid to do it. They don’t know what will happen or how to do it. Stick around until the end and I will help get you through that.
What If All My Staff Leaves?
The first thing many people are terrified about is that their staff will all leave them. Many think that if they tell their staff they are going to be getting taxes taken out and that they will now be able to dictate when people work that the staff will leave them. Perhaps they are true ICs already, running their own business, have many other clients of their own, and don’t want to give that up!
All of this is a valid concern. If your staff leaves, you are left with many clients and no one to help service them. You are only one person. There are certain ways to make sure that this transition happens perfectly and specific things you should not do.
What If My Clients Are Unhappy With The Shift?
The only problem that would come up with the clients is if their pet sitter changed. (See above) If your sitter decided to terminate the contract with you and the clients had to get new staff members, that is just about the only reason I see clients getting upset with your decision to switch from independent contractors to employees. In reality, they would have to find another company anyways, so time to step up the “why trust us” game.
What If I Have To Raise Rates?
Ah! This is probably the biggest concern percolating in your head! Most likely, you will have to raise rates. There are countless people I have advised that had to do just this. Basically, they were paying too much (I will discuss below) and charging too little so naturally, they needed to shift their client base and raise their rates.
The numbers don’t lie and a lot of people start out with my pricing structure and strategy class. This class helps you understand what you need to charge and how to have a strategy that ties into your goals. There is a good chance you might have to raise your rates.
That is, unless you want to be a non-profit. 🙂
What If I Have To Lower Pay?
This sounds so scary and it is! What do you do if you already know you would like to pay more and now the numbers are showing you that in order to achieve your goals you need to pay even LESS.
Ahhh that is scary and almost incomprehensible.
But trust me, it can be done.
I helped one gal switch from ICs to employees. Her clients went down. Her staff went down. Her prices went up and her profit was higher than ever before. In the end, we need to remember that this is not a popularity contest.
What If I Have To Wait For VRSP?
The Voluntary Reclassification Settlement Program is through the US federal government. If you submit a form and pay a small fine they will grant you employee status and not look at your prior years.
Did you know that audits can happen up to two or three years later?!?! So even if you were to switch from ICs to employees today… it doesn’t mean in a year from now you couldn’t get a knock at your door asking to explain your ICs from 2 years ago!
We All Need To Be Leaders
With all these problems, it is easy to stick our head in the sand and play ostrich. But guess what? If we want to be the best leader of our life and business – we have to face this fact. Pretending it doesn’t exist isn’t going to get us anywhere and many, many, many states are cracking down and making it impossible to have ICs.
The benefits of having employees are that you can train them, you have more control, you won’t be scared of an audit, and YOU, the business owner, are protected because you are able to have all types of insurance. (Non-owned, worker’s compensation, general liability, etc)
As an established business, switching to employees is possible but you must have a plan. You must know the steps you need to take and what it is going to cost you. You want to think about the big picture and know why you are doing it so it will help you get through the tough times. This is something that is tougher to accomplish the larger your company gets so if you are thinking about doing it, I would highly suggest that you do it sooner rather than later.