More Staff Not Necessarily A Boost To Business
Many a business owner encountered by Macks Advisory in turnaround or restructuring projects got into financial difficulty believing that hiring more staff would necessarily boost business. SME’s are often under resourced. Let’s consider this in more detail.
Owners entirely overlooked the possibility that outsourcing functions not core to their business but nonetheless important to it, could not only have avoided the trouble they were in but have actually boosted profit.
Business owners should promise themselves forthwith to analyse their companies to determine where outsourcing can save money and make available immediately useful advanced technology able to give them a competitive edge in their market.
Indeed we’d be prepared to argue this should be a strategic imperative.
It’s not uncommon for smaller businesses to outsource accounting services, debt collection, creation of an online presence, marketing and public relations, IT solutions, and customer support services.
But any SME owner not outsourcing what are considered to be the big three (technology services, accounting and marketing) should consider doing so – with care.
Choose wisely
Just because outsourced people have specialised knowledge beyond your ken, doesn’t mean you shouldn’t quiz them and test them carefully.
If you’re unsure of what the “right questions” should be, seek advice from contacts in your line of business that have had experience employing the sort of outside help you’re considering and talk to organisations representing your industry.
Make sure there’s a contract that sets clearly specified and realistic objectives, that provides for checkpoints and monitoring and where there’s small print, that your lawyer sees no problems with it.
Most importantly, ensure you feel comfortable with the people you outsource, for these are the people you’ll need to work with collaboratively in close association.
An overview
Outsourcing:
- Gives a business owner economic access to people with valuable specialist skills not available among existing staff
- Allows existing staff to focus on core business activity and accordingly boost quality and productivity
- Frees up valuable capital to invest in business growth, rather than have it tied up in staff battling to come to grips with skill sets likely to be beyond their capabilities
- Avoids direct costs associated with taking on new staff – among them payroll tax and superannuation that can add 15% to 20% to the cost of an employee’s salary
- Avoids the indirect costs of new staff. For example, human resources required for managing them, new equipment as well as facility costs such as computers and desk space
- Avoids additional compliance requirements to accommodate workplace regulations associated with every in-house employee
- Also allows businesses access to a highly skilled workforce that can be readily increased or scaled down as circumstances dictate
Not for everyone
Outsourcing isn’t for all SMEs, especially the smaller ones. Costly risks can be involved. Ensure you hire the people who can best provide the carefully researched needs of your business. Ensure there is a cost benefit in carrying out a clearly defined strategy.
For example, many companies that outsource IT and/or marketing services do so under retainer contracts for a specified number of hours monthly.
But remember, you can’t expect outsourced personnel to run your business – and you shouldn’t let them try.
Monitor carefully what they’re doing while nurturing a collaborative and productive relationship.
For more information, contact Macks Advisory on 08 8231 3323 or visit our office at Level 11, 99 Gawler Place, Adelaide SA 5000.
