Small Business Owner's Want To Save Money And Grow Your Business?#smallbusinessadvice#startups#entrepreneurs
This is always a huge question for small to medium sized businesses. Obviously you are in business to grow it and hopefully do it in as smart a way possible.#outsourcingtips
Having been in this category for over 25+ years, it was always a Catch-22! You are a business that is successful in your market but because of your size and resources, you don't have the massive budgets larger businesses have at their disposal in your competitive market. How do you overcome this?
Well now that I am a full time consultant and pretty much deal with this category almost exclusively, there are some points I would like you to consider, that are a little "out of the box", in terms of ways to accomplish this!#howtogrowyourbusiness
I hope you will heed my advice because if you do, you will have a strategy that will do both. Grow your business and save valuable cash flow, for you to exceed your expectations. It is something I used toward the latter part of my ownership reign, and it is one not many small business owner's even ponder, to tell you the truth!
Let's look at the cost a business incurs by hiring full time employees, shall we?
This is much more costly than many people think! First you hire someone for a particular role in your company. Well the hard costs just start with the salary! There is benefit costs, training time and the cost of that, and then if it doesn't work out, you have thrown some valuable resources out the window! Then you have to Carefully let them go.
There has to be a smarter, more cost effective way to accomplish this, right? Well you bet there is!
There is an untapped pool that many small business owner's hardly ever consider and if you listen to my advice, you will surely be well on your way to growing and saving time and money in the process.
What am I talking about? Well hiring Contract Employees and Consultants! Yes you read that right! This could save you a ton of money while affording you the opportunity to bring in people that could make a huge impact in your business that you most likely couldn't afford otherwise.#smallbusinessstrategies
Now I know there will be owner's out there shaking there heads and saying, that sounds ludicrous, but let's evaluate this strategy, and see if you don't agree.
First I would like to tell you a little story of how I stumbled on this way of thinking!
In 2003, we landed Trader Joe's. A $10 billion retail giant, for 3 types of coffee nationally. At the time our sales were hovering around $5 million. A typical SMALL Business. Almost overnight we went from $5 million in sales annually to $12 million. Now at $5 million we had a skeleton staff for accounting and data entry/customer service. The fact that our sales grew so fast threw up a red flag that "Quickbooks" with me doing the bulk of the work wasn't going to cut it anymore.
I started looking for a real Full time CFO/Chief Accountant. My accounting firm at the time, was doing some monthly financial tasks, compiling all of the information I entered with the help of 1 of my employees, who did a large part of the menial data entry. Most of the candidates that I interviewed were looking for a salary in the range of $80-95k. Which is reasonable for the position, no doubt about that.
I was hesitant about hiring someone though because you have to look at the total cost of talent acquisition! It's just not the salary, it's the benefits, the unemployment insurance, the payroll taxes, the cost of getting them up to speed. Even the most seasoned person, needs a little "break in" time, to get acclimated. Every business is different, right?
Well I was discussing this with my accountants and that type of employee would actually cost me approximately somewhere around $115-$120k annually. That is a big chunk of change. So I decided to look around for a retired or semi retired CPA, to do the work as a 1099 employee. A contract employee, I don't like the word temp.#bestsmallbusinessadvice
Well my accounting firm referred me to a gentleman who had recently retired from their firm. He was extremely skilled, meticulous and really not ready to be put out to pasture. I have to tell you, it was one of the best things I ever did, and it started a new thought process on how I viewed employees.
He would come in about 20 hours per week, I would pay him $50 pr/hr, and he would perform all of the duties an employed CFO would do except maybe the employee interaction. Well do the math! It cost me less than HALF of what I would have invested, plus there was no employee/employer concerns, there was very little learning curve as he was with the firm who knew my monthly processes, and he was professional to the T!#topbusinessadviceblogs
I began to expand on this strategy, by hiring a consulting firm to assist me in researching more cost effective ways to supply Trader Joe's and to take a look at my overall business, to get another set of eyes and hopefully an opinion that was not concocted by some hidden agenda.
They were well worth the money spent! It was approximately $10,000, but what it did was identify where they saw weaknesses and where they saw our strengths. They also analyzed all of the functions of my current staff. They came back with a detailed report and strategy that really opened my eyes.
It seemed that an employee of mine that was highly paid was actually doing nothing to help the company. I looked into this further and found out it was true. The employee had this elaborate way of making the functions he was supposed to be doing, seem like he was doing the job of 2 or 3 people, when in fact he was really just faking it! Well that $10k report saved me $175K the next year!
So I started to bring in specific consultants for specific tasks. I would pay them a negotiated fee, either by the project or hourly and I would get back superb quality work! No worries about employee rights, lawsuits, benefits, or baby sitting! This flat out works everyone. My business went from just around $12 million to $28 million within 2 years, of using this strategy!
You get highly skilled professionals that you probably couldn't afford on a full time basis, or your business really doesn't need THAT type of employee full time, but you get all the benefits and then some if you do it right!
Ok, sure I did have to hire full time staff for some of the duties because of the growth, but not nearly as many as you would think. The reason being, myself and with the help of various consultants, drilled down to the most necessary tasks that needed addressing. So when I did determine to hire a full time employee it was MORE than justified and the position had a laser targeted job description! That was awesome, in my opinion. No wasted time and money, on half necessary employees!
Now I know some of you will be shaking your head because it sounds like I'm pitching myself as a full time business consultant. WELL I AM!! Where are you going to find an employee that has my kind of knowledge and experience, without having to commit your resources indefinitely on an employee? You are not. Many businesses look at consultants as luxury items, or finally hire one when your business is going down the rabbit hole and you need help trying to save it! That's too late!
Do it now. You won't regret it. It is a win-win. You get a highly skilled professional that you don't have the normal employer/employee relationship and guidelines to deal with. You get the benefit of someone who can put plans and processes in place to grow your business, and you don't have the ongoing costs of a full time employee! Not to mention all the complications and compliance issues you take on, when you directly hire someone. Hiring people is 1 of the Top 3 Risks business owners take! Why not minimize that risk and maximize your ability to get the most out of a highly skilled professional? Doesn't this make sense?
I'll never forget, I was at a local Chamber of Commerce Meeting. I was the guest speaker that night, and I was discussing all of the nuances of operating a Commodity Based small business. I was at a table after the talk, with other business owner's and 1 attorney who specialized in employment law.
He told everyone at the table a story of a business who hired a key employee for $150k per year. The owner of the company, who was also the HR director(multiple hats like many small business owner's), wrote an engagement letter detailing the employees terms of employment. You know the standard welcome to the company letter, your position is X, Your starting date will be X, Your Salary will be $150k annually and the available company benefits such as health insurance, dental, 401k after a vested period.... You know a standard letter! Right? WRONG!!!
Turns out, the employee was a disaster. The owner went to fire him after only 10 weeks on the job. This was after 2 warnings in writing and a verbal warning with a witness present.
What happens? The employee turns around and sues the company for the remainder of his $150k pr yr salary! Why? Because he could because that is what the owner "committed "to in the initial engagement letter!!! The employee won the suit! Talk about getting taken to the cleaners! OUCH
Lesson to be learned? When writing a letter of employment, never put annual salary, always put THEIR WEEKLY WAGE!!! There is a nugget that is going to save some people a ton of money going forward!!
SCARY huh? Anyway, I hope you will take this article and implement some of the strategies. In closing, here are some of the takeaways I hope you have!
-Be Very Careful When Hiring Key Employees!
-Contract Employees and Consultants Should be Used BEFORE you commit to any full time employee!
-Minimize Your Full Time Employees, this will save you money, time and possible Employee discrimination or other HR headaches!
-Only hire someone Full Time If you Really Really need too.
-Often times by hiring a consultant you will get a Highly Skilled Person you would normally never be able to afford!
-There is a Growing Number of Retired Or Semi Retired Highly Skilled Professionals Available to you!! This is a Great Way to Get Someone involved in your business that can make a HUGE Impact!!
Without you risking hiring someone Full Time!!
I hope you enjoyed this article. I hope you use it to grow your business, because it can be done this way! Thank you for following this blog, please share it, comment, and watch the video below!
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