Truth about Taking on New Employees (LA 1673)
Truth about Taking on New Employees (LA 1673)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Good day.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWit broadcasting from the valley of the sun.
Steven Jack Butala:
Today, Jill and I talk about the truth about taking on new employees.
Jill K DeWit:
I’m excited.
Steven Jack Butala:
This is a requested topic by one of our really active members. And it’s very timely because we just took on a new employee and it’s actually going really well. That’s not always how it goes.
Jill K DeWit:
It’s true.
Steven Jack Butala:
Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community, it’s free. And don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like.
Jill K DeWit:
Okay. Luke wrote, “Do you pull out any recently bought properties from your list?” So in the mailer I’m about to send, I noticed some I’ve just sold in the past three years and the buyer paid at least three times what we’re offering. And this is good because you have a couple comments that you added in here. So one of them is… Is it just one comment or more than one?
Steven Jack Butala:
Yeah, just one.
Jill K DeWit:
Okay. So another person chimed in and said, “Oh, here’s what I think.” So Aaron comments, “Results will vary. But a few months ago I bought five acres from a guy who bought only two years ago with his now ex-wife. They just wanted out and to split the proceeds and go separate ways. They got back almost what they paid for it. And that was a buy for 12,000 and sell for $39,000 for me. I wouldn’t scrub too hard.” I believe that too.
Steven Jack Butala:
Don’t scrub too hard. Here’s the math on scrubbing too hard. You’re going to sit down and do a mailer, or you’re going to have Concierge Data do it. You’re going to spend the money and the time and the energy, you’re going to do the red, green, yellow test and all of that. And then at the very end or very close to the end, right before you price it, are you going to go in and take out 25% of the mailer, which is just a tiny little cost when you look at the actual cost and the time. It’s hundreds of dollars on a multi thousand unit mailer. Hundreds of dollars that you’re trying to save for what? That could be the diamond in the whole mailer, just like just what happened here. So I’ve been saying this for years, years and years, don’t scrub the data too hard. Just send it.
Jill K DeWit:
I agree. And you never know what happens. Like we talk about this often. It could have been a transfer. Maybe dad just passed on and the attorney put it in the kid’s name. And three months later, your kid gets your letter. And you wouldn’t have known what the situation when the kid is so ecstatic, that you reached out to buy it, because he was trying to figure out what to do with it. You can’t assume.
Steven Jack Butala:
So please… Jill and I have been saying this for years, what you’re buying is a situation. In this case, Aaron bought unfortunately a divorce liquidation situation and he bought for 12 and sold for 40. And so you can’t tie that, in the data, you can’t know what that is. You have to just blanket it out and see.
Jill K DeWit:
And it’s so funny. It’s like the whole back tax thing. If you’re not sure about it, try it and watch. We’ve been doing this now for, golly, decades combined. You decades, me a decade, in this business and by taking stuff out, you never know what you’re missing. That’s the main thing. And like you said, just let it rip and see what happens.
Steven Jack Butala:
This whole business of decades thing makes me think.
Jill K DeWit:
Uh oh. Are you feeling old? I’m sorry.
Steven Jack Butala:
No, no, not at all. It’s not that. I never feel old. That’s not it. It depends on where you are in your life. So we started this thing in 2015, and we have people-
Jill K DeWit:
Just Land Academy.
Steven Jack Butala:
We’re talking about-
Jill K DeWit:
Land, not buying.
Steven Jack Butala:
Right. Well, we started Land Academy in 2015. I started buying and selling land in the early nineties. But we have people, since we’re talking about employees today, they didn’t graduate from high school. They’re like class of 2016. So we started this thing before they graduated from high school. And it just-
Jill K DeWit:
What’s your point?
Steven Jack Butala:
My point is, four years or maybe a decade. When you say the word decade, to some people… Like a decade to me is like, “Eh, so we add another decade.” But a decade to younger people is like, “My God,” It’s like, “What? You started this in 2015. That’s crazy.”
Jill K DeWit:
Yeah. That’s funny.
Steven Jack Butala:
“That’s why you have gray hair. You’ve been doing this for five years.”
Jill K DeWit:
Hilarious.
Steven Jack Butala:
Today’s topic, the truth about taking on new employees. This is the meat of the show. Jill, I noticed you had notes.
Jill K DeWit:
I do. So, I see this as two ways. I hear people getting excited about it or freaked out about it. Totally serious. And it doesn’t matter whether it’s a family member or whoever it is that they’re considering hiring, it’s scary for some people. And I understand that. And I think you should be cautious, you should be a little scary. You want to make sure you do it when, A, you can afford it. And B, there’s a real need. Maybe you’re losing deals, losing money because you don’t have the help that you need to get stuff done. And so you’re really cautious about it. You should be.
Jill K DeWit:
And then I hear people too that are afraid because it was one thing for them to think about leaving their job and this is their livelihood. But to take on the responsibility of feeding somebody else’s family, hiring an employee, that’s a weight on them and I totally respect and understand that. And I’ve gone through that myself.
Jill K DeWit:
Then you get to, now let’s get past that. We get through all that and you’re ready. You know, it. You’ve got the funds to do it. You’ve got the workload to do it. You’ve figured out exactly what they’re going to be doing. Now, it’s exciting. When you really think about it and you take on-
Steven Jack Butala:
When you mentally make that shift, it’s exciting.
Jill K DeWit:
When you’re ready, and you do it and you know, wow, I can do three times the deals now because they’re going to do this and they can take this off my plate. And the person I hired by the way is so much better on the phone than I am. Fill in the blank. So I know it’s going to be even easier and faster than me, then it gets to be really awesome. And I’m going to let you talk, but then I have some ways… I know you’re going to talk about how to pay them and some good tips for people.
Steven Jack Butala:
Yeah, sure. There’s a couple milestones for me in this business when I knew it was working. That’s what we’re really talking about. Yeah. I don’t know if I should hire an employee or a group of employees because I don’t know if this is going to work. The last couple deals worked, but I’m not sure if this is permanent or if I just got lucky. So I remember like it was yesterday when I walked into my office around 1999 and looked around and I think it was Monday morning and I was making all kinds of money, hundreds of thousands of dollars a year on the side, buying and selling land. And I just remember taking a deep breath and saying, “You know what? This job is costing me money. I’m going to quit right now.” And I did.
Steven Jack Butala:
I’m not saying you should do this today at all. I’m not advocating this. I think it takes more thought than that. It should take more thought than that and planning. But I did quit. And 30 days later, I looked in myself in the mirror and said, this is the greatest thing I’ve ever done. I should have done this a year ago. And that’s how I knew it was the right time to quit. Same thing happened about two years later when I got my first employee. So I’m looking at the math and I’m saying, okay, I make 15, $20,000 a month buying and selling land. I’m going to have to hire somebody if I want to get to the next level. That’s just how it is. And I’m going to have to pay this person 2 or $3,000 that comes right out of that 15 or $20,000. That’s how I looked at it. In a very, very straightforward cashflow flow type way.
Steven Jack Butala:
And so I did. I took a chance. And then I dumped everything on that person that I didn’t want to do any longer, deeds and all kinds of other stuff that I probably had no business doing anyway, because I was the forward thinking person then, and I am now. The person who’s out front, making the big picture decisions for everybody. And it worked out great. What ended up happening is, I then focused on buying… This is long before I ever did a mailer. Buying property, just acquisitions. Because I had that other person managing everything else, all the administrative stuff and the details for the sale of the property. And I was doing all the presentation and things like that.
Steven Jack Butala:
So it’s a huge, huge jump to make. And it’s a huge risk. And if you micromanage that person, you might as well not hire somebody. That’s the truth. That’s the truth about getting an employee. You have to let them go. And it’s very hard for people to do that. Me included. I mean, me first.
Jill K DeWit:
I know, I’m just kind of laughing about that. That’s true. That’s one of the little hangups. That was a good point. You can’t walk around double checking their work because then why have them? That’s very true. And you have to let them… Yeah. Before you hire them, have a real good plan. Even at the times when our companies were really small, we were just growing, we would always make a little SOP, standing operating procedure.
Steven Jack Butala:
Well, you did. I didn’t back then. I wasn’t smart enough.
Jill K DeWit:
No, no, that’s not true. I’m talking about me. Just kidding.
Steven Jack Butala:
Here’s the truth about it from a-
Jill K DeWit:
But you know… One second, I want to finish that thought for a second.
Steven Jack Butala:
Sure.
Jill K DeWit:
So the person can easily jump in and they know that there’s a checklist of 10 things. And then you can really sit back and relax about knowing they know what to do.
Steven Jack Butala:
Back in my hiring days, you hire somebody and that’s their job. So they come into work, they make some coffee, and they work there for eight hours and it’s a fixed cost. So if it cost you $3,000 per employee or some number, it’s a lot more than that now, as it should be. You’re going to pay that $3,000 a month, regardless of if you buy or sell any land. That was the struggle with me, in the past it was. Because it’s like, well, sometimes we have great months and sometimes we have not great months. That’s just being an entrepreneur. Sometimes it’s zero and you still have to pay. So that’s a hard thing to get your head around.
Steven Jack Butala:
Here’s the great news. We live in a land now of outsourcing. And so employees don’t have to be a fixed cost for you. They can be a variable cost. And in the case of outsourcing overseas, that variable cost is 3 to $5 an hour to get some amazing talent, amazing talent, only for certain tasks, but amazing talent. So, if you are buying more and selling more than one or two properties a month, I urge you to get some type of help, even if it’s variable cost help overseas, just to get in the habit of it. Because if you’re buying one or two now, and you’re going to buy two or three or four in the future, you have to get used to managing other people. And some people never, ever, ever get out of that first gear. They just can’t do it.
Steven Jack Butala:
I’ll tell you what, and I say this with respect, Mark Podolsky’s one of those people. Mark and I used to work together. And he has a very tough time with employees. This is the truth. His wife, Rachel, who I adore, came to me a couple of times when we worked together and said, “Can you please tell Mark to get some help? All he does is work.” And when I say that with respect to both of them.
Jill K DeWit:
Yeah. I understand. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show. I’m sure you helped out. And that was really nice.
Steven Jack Butala:
I did. Tomorrow, the episode on the Land Academy Show is everyone I know is killing it in the land business. You are not alone in your real estate ambition. I’m going to tell a really quick story about this tomorrow.
Jill K DeWit:
Okay.
Steven Jack Butala:
And I’ll probably tell the same anecdote tomorrow.
Jill K DeWit:
Oh, goody.
Steven Jack Butala:
I am very good friends with a guy who’s a CEO of a huge commercial construction company here in Arizona. And he told this story a lot of years ago. He said a developer came to him. This is 20 years ago. A developer came to him and said, “We got to build these apartments near Arizona State University. I want you guys to do it. Cost it all out. We’re going to do this whole thing and we’re going to make a ton of money. And then we’re going to resell it to the university.”
Steven Jack Butala:
So I communicated with him throughout this process, it took a year for the project to get done. And he came in one day to the bar and said, “Here’s what happened on this deal.” He’s like, “Remember this whole ASU deal, we did this whole thing? Guess what? The only person who made any money on this deal was the person we bought the land from, and the broker.”
Jill K DeWit:
I believe that.
Steven Jack Butala:
“We lost money. The developer lost money. And I don’t think that the university’s going to make any money on this at all.” But the land guy… And he said it to me because I’m the land guy in our whole group. And that’s what this next episode is about.
Jill K DeWit:
That’s hilarious. I love it. Thank you for tuning in and we hope you find our content valuable and we do appreciate your support. I know you’ve heard this before, so if you haven’t already, please check out our YouTube channel, hit the subscribe button.
Steven Jack Butala:
We are Steve and Jill. Information…
Jill K DeWit:
Inspiration…
Steven Jack Butala:
To buy undervalued property.
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