Don’t Give Away Business to Get a Typesetter

Tom Crouser September 27, 2011 0

Reader writes: Tom, I own a one year old pack and ship store in Canada. I have had a successful first year. I need to replace my current Graphic Designer, who is returning to school and an opportunity has opened up for me.

A local Graphic Designer with his own business, which he has been running for four years, has approached me about joining forces to take our businesses to the next level. He is the only employee in his company and he has a network of suppliers for all of his needs. He feels he has plateaued and will have difficulty growing on his own and he likes what I have achieved in terms of bringing my franchise brand to the area and presenting myself and running the business in my first year.

He is proposing that he work for me for salary – and understands I am paying a junior salary, and cannot yet offer benefits – and he wants to negotiate commission/ pay for service in addition to the base salary. As well, because his company has current web customer for whom he provides hosting on an ongoing basis he will still run those portions of his business that we don’t yet do in my shop.

I have been involved with your surveys and follow your blog and social media and respect your expertise. I am wondering if you could direct me to some resources and/or give me some ideas of if and how creative commission works in the industry and what pitfalls and problems I should watch out for in this proposed arrangement.

Thanks for your consideration of this request.

Tom writes:

Short answer: His proposal is a complicated question in my view. In short, pay range for a graphics person is $14 to $18.25 per hour with typical being $15.50. This is our recommended range from both public and our (Crouser & Associates) non-public original research among printers. IF you do a salary plus commission plan (see below for issues), then it should be targeted to still provide the above range of compensation. But don’t let him lead you where you don’t want to go. You basically had a typesetter who left. Hire another typesetter and get on with life. He’s proposing you hire him and give him part of the company. Don’t do it.

Long answer: Interesting question. Complicated one as well as what is being proposed has whole buncha complications under Wage and Hour laws, at least in the US.

My experience in Canada has been that although the basic laws are similar, they diverge greatly on some issues. So, you will have to vet everything here with a local labor attorney (usually we look for someone who works the employer’s side of unemployment and personnel issues).

+ He’s proposing a base salary plus commission plan for doing inside work and that would be a problem here in the states – Under the Fair Labor Standards Act of 1938 he would either be an hourly or Salaried Non-Exempt (from overtime) Employee. Hourly is pretty straight forward; pay by hour and overtime after 40 hours/week in most places. However Salaried Non-Exempt is less clear. Here he would be paid a salary of $xxx for ANY hours worked during the workweek and THEN PAID OVERT IME based on one of two formulas (won’t go into here because it would confuse issue but be glad to address if you are interested).

+ Then there is the commission thingy. Again, in the states, any commissions that he would earn would be added to his base salary (whether hourly or salaried exempt and then any overtime during the week in which he receives commissions would be added to base pay and then you would PAY OVERTIME on the commissions, if any overtime.

+ Whether you should do it or not is another question.

<< I need to replace my current Graphic Designer, who is returning to school and an opportunity has opened up for me. >>

Okay, what’s wrong with hiring another one? (Difference between graphic designer and a typesetter is a typesetter can type)

<< local Graphic Designer with his own business … approached me about joining forces to take our businesses to the next level. … He feels he has plateaued and will have difficulty growing … he likes what I have achieved in terms of bringing our franchise brand to the area and presenting myself and running the business in my first year >>

In my view, this is code for he’s not making much money (because he can’t get customers – probably sales call reluctance) and wants a job but wants to hold out the golden carrot to you. Okay, hire him on the same conditions you hired the other guy (gal). If you wish to pay him a SMALL commission and you have cleared the LEGAL issues, then you can but the pay should still remain in the general area of what I cited.

YOUR BIGGEST PROBLEM -> getting too far away from your business model. As I understand it, it is -> Design, Print, Copy, Ship

Here’s my guess about your situation.

What kind of design are your customers looking for? They’re not looking for the ad agency-high-end-design work (if they are, open an ad agency and sell the franchise), they are looking for typesetting with a flair and what you need as a worker who can do typesetting with a flair. So, hire one. This guy may fit the mold and may not.

But, he probably views himself as a graphic designer (who are four-year degree holders by the way) and wants to take you in a direction AWAY from these lousy walk-in kind of customers who are your bread and butter.

That’s the greatest issue, in my view.

Now, resources? I really don’t know of any others that would be directly on point with your question. I suppose the trade associations might have some guidance but, again, don’t know any specifically on point.

Hope this helps and lemme know if you have follow on questions, ya da…. And thanks for your participation in our surveys. Preciate that very much.

Tom

And here’s the rest of the story … after a few months I heard from the owner again

Tom, Just wanted to let you know vies-a-vies my Graphic Design Business Owner “Partnership” vs. “hiring another typesetter” – which a wise man suggested I do – I went with the latter, and my typesetter has started and looks like she will be a winner.

The good news was that I let the discussion unfold until the prospective partner spent some time on the front line in my store and then he backed out as his not being “what I needed”.

Good news is that he has said we will now be his printer of choice, and will give us some sanity checking and consultation on our price estimating – which was a strength for my employee that left, and not yet a strength for me or my new person.

Good outcomes all around and I very much appreciated your quick response and sharing of your perspective.

Best Regards . . .

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