Tuesday, August 26, 2008


Laura-Jean is back with some advice on an issue that is relevant to any growing craft business: hiring help.

crafty business

Here's a question from one of our designer/members at Fresh Collective. Nicole from Precious Pink Designs, has been designing jewellery for years, and is now adding a clothing line, which she is also selling at our shop. She's at the point in growing her business where she's ready to hire help.

Q. I have a friend who sews and she'd like to sew for me when I'm ready. Is there a standard industry hourly wage for sewers? Do you know of a fair average?

A. Being ready to hire help is an exciting point to be at in your business, but there is a lot to consider. First, you want to pick the right person. Then you need to figure out how much to pay them and how much they will work, as well as whether they will be a contract worker or employee. You need to decide exactly what their duties will be, whether they will work at your place or their own, and whether you pay by the hour or by the piece.

It sounds like you're talking about a contract labour situation. There are a lot of details to determine whether someone is an employee or a contract worker, but, in short, if your friend were to take home sewing and sew it at home, invoicing you by the piece, this would be a contract situation. Generally, if the person works on your equipment at your place, and is paid by the hour, that is an employee situation. You can find info on the details that define those situations here.

This can be a great way to start out, because you'll only need bits of help here and there. There are downsides to a contract labour situation. One is that your worker may get busy with other work and leave you high and dry just before an important show. You tend to pay more per hour for the work, and often find yourself shipping out the sewing but spending lots of your own time doing mundane jobs like putting on price tags and packing boxes. As well, if you're not careful, you can multiply your mistakes. I recently had 30 skirts sewn, and I had given my sewer the wrong information about the seam allowance. I got back 30 skirts that were two sizes too big! If we had sewn those here in my studio, we would have noticed something was wrong on the first one and saved ourselves a lot of hassle. At the same time, the plusses of contract labour are many! Your worker supplies and repairs her own machine, you get an invoice and pay it (rather than deal with the paperwork and expenses of payroll) and you don't have to keep her working more than you want or need to.

Your friend may be a good match for your job, but I hired friends to help out here and there in my early years, and found it didn't work out great. I didn't know how to go about finding and selecting someone, and friends were just there, needing work and offering to help. It quickly fizzled out though, because their interests were really somewhere else and they just wanted a job (not this job). I did have one good match, however, who was a friend of a friend. She loved doing crafts, and was an actress with a few auditions a week to go on. I was able to offer her the flexibilty to take an afternoon off here and there to audition, or book a job, and she was able to earn a bit of money with a job that was pretty fun, so that worked out for a couple years for both of us. Don't make the mistake of hiring the wrong person just because they're there offering help.

In a contractor situation, pricing is to be determined between the two of you. Often, you give the sewer one sample. After sewing it, they tell you a price, which you can agree to, or negotiate. Sometimes a bulk order can bring down the price, or the style can be simplified. I usually go into it with a price range in mind that I'd be willing to pay based on how fast I can sew it and how much I think I can sell it for. If something took me 20-30 minutes to sew, I'd want to pay around $5-8. I figure a professional sewer is probably going to be faster than me, so they can make a pretty decent hourly rate.

You may feel like you need more of a general assistant, to do a bit of whatever needs doing around your studio. In this case, you'd be taking on an employee, which makes you an employer, with lots of responsibilities. First, you have to set up a payroll account with Revenue Canada. You'll be responsible to make deductions from the employee's paycheques and submit them to the goverment. These deductions are not only for income tax, but also CPP (Canada Pension Plan) and EI (Employment Insurance). You also have to add to the CPP and EI contributions, which will be an extra expense to take into account. Not only all that, you'll have to pay into WSIB (Workplace Safety Insurance Board), which is the insurance fund to protect workers if they are injured on the job. This is a seperate account you have to set up with them, and you pay a percentage of your gross payroll. The percentage you pay is determined by the type of job you offer and how likely injury may occur. (I pay a little over 1%.)

Ok, yes, this is a pain to set up, but it's not rocket science. You can do it yourself or if you have someone helping with your bookkeeping, they may be able to help you set these accounts up. Another option is hiring a payroll service, possibly through your bank. Many artists feel intimidated by the process, and are tempted to just pay cash under the table for part-time help. Not only could this land you in hot water, you miss out on the chance to count it as an expense. Payroll can easily be your biggest single expense, so doing it properly and writing it off will save you a lot of money and headaches in the long run.

I have to mention that I have the dream team of employees. I'm so lucky to have Jessie and Sian putting their all into their work. They are both just a great fit for me, and I love knowing that I have help every day with whatever needs doing. On top of all the obvious reasons employees are great, I just love the company! It can be lonely working away in your studio all day, and I really find having people around keeps me inspired and focussed and gives me someone else to bounce an idea off of, or ask an opinion of.

But hiring employees has problems too. Once someone is depending on you for their living, it can be stressful when money's tight. You really feel responsible to keep them working, and that may mean paying for supplies and making product you don't really need right now. You can really end up in a pickle financially, and may find you need to lay someone off. Cutting someone's hours, or a temporary lay-off means you risk losing your valued employee to another job. I did find myself in this situation once, and the employee had become a friend too, so it was a big crazy cry-fest! In the end she used it as the push she needed to start her own business, and everything worked out great, but at the time I felt just horrible!

When determining how much to pay an employee, honestly, unless you have a super profitable business or are just plain wealthy, start out very low. I usually start a bit above minimum wage. You can always raise it, but you can't ever lower it. When you're paying someone hour after hour, day after day, it can add up quickly, and they depend on their job whether your business is doing well or not. I'd rather start out low and raise as I can, than have to lay people off because my payroll costs are killing my business. One thing to consider is how much you pay yourself for all the hours you put in. I bet it's pretty low, and maybe a wake-up call to what your business can afford.

Don't forget that you have expenses other than the hourly wage. There's that employer's CPP and EI I mentioned before. You also have to pay vacation pay (4%-6%) and holiday pay (you pay them to not work on holidays!) As well, you have to factor in breaks and lunch. For example, if a worker can make one skirt in an hour, she will not be able to make 8 in an 8 hour day. Maybe 7 if you're lucky. So, a $10 an hour wage may actually cost you closer to $13 per actual hour worked. On top of this, there will be a lot of training in the beginning which will cost you your time and money.

For a general assistant, I look for someone inexperienced, but with the right personality. I can train a crafty person to do anything we do in my business, and I mostly want someone who is going to love the job and give it their all. If someone is interested in what they're doing, they're likely to do a good job. At Fresh Baked Goods, there isn't much room for career advancement, at least at this point, but I do offer a great chance for someone to take on a lot of responsibilty, a variety of tasks, offer a lot of input, and learn a lot about having a small business. For someone who wants to own their own shop one day, or design their own line, the job has more value than just the hourly wage.

One final option for extra help is taking on a co-op student. In short, high school students get credits for working for you and learning through "real world experience", and you get free labour. Some have all day placements for one semester, and some are every other day (mornings or afternoons only) for the whole school year. While free labour sounds great, they are very inexperienced and require a lot of training and supervision. I've had some bad experiences (which I later realized I should have nipped in the bud and given them the "real world experience" of being fired from a job they aren't taking seriously!) but I also had some amazing experiences with lovely, sweet kids who work hard and love to learn. Jessie, my main assistant, was originally a co-op student almost a decade ago, and I hired her on after she finished college. Register your workplace with the Toronto District School Board and a teacher will probably give you a call in the fall to see if you'll take on a student.

Well, I hope this is a help to all of you who are thinking about taking those big steps toward growing your business beyond your own self-employment. I found the transition tricky at times, but it's a step that can really get your business growing. New people always bring a fresh perspective and new skills to your business and it's a great feeling to be able to get things done so much more quickly when you don't have to do everything yourself! And good luck, Nicole! I can't wait to see all your new fall stuff on the racks and see it start flying out the door!


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