When John Hettwer, owner of Payroll Plus in Cornelius, was 13 years old he started his own lawn mowing business. The following year he bought a ride-on mower worth thousands. In college he was a top salesman for a national educational book publisher. After college he became a straight commission salesman for Trane, selling commercial HVAC systems, some which had to be transported on a series of 18-wheelers. He was a top seller earning a fat paycheck. But the 90-hour workweeks started taking their toll. Work and life were seriously out of balance. Then an old college buddy approached him with the opportunity to open a payroll processing company.
Hettwer left Trane and dove into the payroll biz with his typical drive and passion. And he hasn’t looked back since.
When Hettwer reflects on his days as a salesman he can see little comparison to his current life. His blue eyes flash when he talks about having lunch with his wife and newborn son. “There were just so many things missing from my life back then,” he says.
When his college buddy and former business partner Jeff Zink approached him to start a payroll company, Hettwer’s first question was “Why payroll?” Zink, who was equally frustrated with his own sales career at the time, extolled the virtues of reaching January 1st each year with money coming in. “As a salesman you start each year at zero,” Hettwer explains. “With payroll, you start out where you left off on December 31st. That sounded pretty good to me.”
Hettwer’s starting salary at the brand new Payroll Plus was about one-tenth of his commissioned income as a salesman. Seeing it as a long-term opportunity, Hettwer was willing to take the cut. He leveraged his experience as a salesman and hit the streets to find companies eager to outsource their payroll services.
In 1996, when the company opened, it cost about $40 every two weeks to process the payroll for a company with 10 employees. They started out with two clients. With $5,000 in monthly overhead, that $160 fell far short of the mark. But each month Hettwer doubled the client base. Hettwer and Zink had the liquid capital to persevere and had planned for years of negative revenue.
“We hoped to turn a profit within two years,” Hettwer explains. “We didn’t really know the business and we were optimistic entrepreneurs. It took longer than two years. But we kept with it.”
For a short time Hettwer backed off and became a silent partner, giving up his small salary to become a sales manager for another company. Zink oversaw operations until 1999, when he called Hettwer and told him he and his wife were contemplating a move to Wisconsin to be near family. He wanted out. The partners had agreed to give one another first right of refusal if they ever wanted to sell. After a little thought Hettwer decided to divest a large portion of his stock portfolio and buy Zink out. He also bought Carolina Payroll Solutions, a company Payroll Plus had been working with cooperatively, and went back to payroll full-time in 2000.
Payroll Plus became profitable in 2001. “I never gave up because I was convinced the numbers would work,” Hettwer says. “A combination of determination – some would call it stubbornness – and naiveté kept me going.”
Challenging the Process
Hettwer has a mechanical engineering degree, with an emphasis in industrial engineering. “It’s a strange combination, I know – engineering and sales,” he acknowledges. But the combination really works. Payroll is a process and industrial engineering is all about evaluating processes. The challenge has been in making the system as efficient and effective as possible.
Payroll Plus has always placed customer service high on its priority list. The company has had one specialist take care of everything for each client right from the start, ensuring continuity and familiarity with the clients’ needs. It worked great most of the time but there was an inherent weakness in this system.
One of the first challenges Hettwer faced was standardizing procedures. “Clients love dealing with the same specialist all the time but when someone was out sick or on vacation another specialist would take over,” Hettwer explains. “That specialist would do things differently and confusion would often result. After we made things more consistent across the board we eliminated that problem.”
Payroll is an ever-changing landscape. It’s imperative that technology keeps pace with those changes. Hettwer has had to change software companies three times to stay ahead of the curve. His latest investment is a $50,000 software platform that will allow client’s employees to tap into their online databases and view and print out documents such as direct deposit records and paycheck stubs. This service will be available to all clients, whether they have one employee or hundreds.
Payroll Plus is also changing over from windowed envelopes to pressure sealed envelopes – the kind with the perforated edges that rebate checks and many paychecks come in – this year. They’re less expensive and simplify the printing process. Hettwer will offer both windowed and pressure-sealed envelopes for a while until all his clients are accustomed to the change. “Some people resist change and I want to be sensitive to that.”
“It’s so important that we consider the customer first, to offer a high level of service to our clients and the same level of service to small businesses that are offered to larger businesses in order to compete,” Hettwer says.
Payroll Plus’ biggest competitors are also two of the largest payroll processing companies in the country: Automated Data Processing, Inc. and Paychex, each of which has hundreds of thousands of clients. Hettwer is aiming to reach 2,000 clients by 2012.
Payroll is About People
Technology is not the only thing Hettwer focuses on to remain competitive. He never forgets that payroll isn’t really about software and packaging methods. It’s about people.
“I’ve always gone on the principal that if I keep small business owners’ best interests in mind, and think about their employees, it’ll all come out fine in the end,” Hettwer says. “It’s not just about money.”
Hettwer operates on four core principals: offering great customer service; offering a good quality of life for his employees; giving back to the community through charitable donations and services and getting involved in local activities; and employing sound business principals that allow the company to run profitably.
Employees work better and treat clients better when they’re happy, Hettwer explains, and they are more likely to stick around. He tries to be flexible about meeting employees’ needs. And he keeps a close eye on the office culture. Cattiness and disrespect are not tolerated. It’s just not the kind of environment Hettwer wants to cultivate and work in.
Hettwer’s focus on offering superior customer service means Payroll Plus is extremely flexible with its clients too. He’s developed the company so that clients can send their payroll information in via delivery, phone, fax or electronically. He sends paychecks to 27 different states even though the bulk of his clients are companies with between five and 300 employees based in western North Carolina. “They have plants and offices in other states, too,” Hettwer says.
Hettwer is proud of the personalized approach Payroll Plus takes with clients. While some payroll powerhouses are too big to notice if a client’s bi-monthly payroll report hasn’t come in, Payroll Plus’ specialists call clients if they notice that they haven’t received a report.
“That paycheck may be very important to someone’s employee,” Hettwer asserts. “He may be waiting on it to make a mortgage payment or take his wife on vacation.”
The biggies will sometimes require clients to make their own 401(k) deposits or send in their own tax payments. Payroll Plus simplifies things for its clients.
When Hettwer calls on a potential client he tells them that once they’re in the system all they’ll need to do is send in their employees’ hours and put the money in the bank. Payroll Plus will do the rest. Even the smallest businesses can benefit from outsourcing their payroll services and find it to be cost effective, Hettwer insists.
“Keeping payroll in-house is just a bad decision for most small business owners,” he says. “Paying 10 employees every two weeks with us costs less than $100 per month, that even includes direct deposit of the employees’ checks if desired. But it saves a ton in headaches. A lot of people say, ‘Oh, owners of very small businesses don’t need payroll services.’ But think about it. The owner of a business with only three employees is probably doing everything including emptying the wastebaskets. He doesn’t need to be pulling his hair out over the payroll.”
In the spirit of keeping business owners’ best interests in mind Hettwer always tells potential clients, “If you don’t hire me, hire one of my competitors.”