More Work is Coming in – Can you Handle it?

company growth, hiring, independent contractor vs employee, outsourcing, small business

Congratulations! Your company is growing. With that growth comes higher revenue, more clients, and more work. How should you handle the work that comes in? Obviously you can assign the work to your current employees if their plates are not already full. However, in a growing company this is often not the case. If your current staff is already operating at full capacity, you have to look for options for increasing that capacity within your business to handle more work such as:

* You can hire more employees to take on new or additional tasks

* You can subcontract all or some of the new work to another company to complete

* You can hire a professional independent contractor or company to handle administrative or other operational tasks within your company to free up your employees to the work under your company’s direct supervision

* Increase efficiency in the staff you have through better systems/technology

Which option is best for you? There are some pros and cons with each approach:

Hiring a new employee is usually the first thought when your company needs to allocate the work that comes from company growth. With an employee, you have total control of schedule and work product. However, the primary incentive for hiring employees is to invest in the future of your company. Employees contribute to growth and culture and can rise to leadership in the future. However, the process of finding and training new employees can be time consuming and expensive. Employees come with overhead expenses such as payroll taxes and benefits that you don't have to pay for with independent contractors and outsourced companies.Taking into account all of these factors, hiring makes the most sense when the new business is part of a sustained growth curve that will require a long-term solution. The expense of hiring and maintaining the new employees can then be recovered over time.

Outsourcing work to another company is another option. This option can be both for a one-time project or recurring long term work. Outsourcing is most beneficial when you use it for tasks that require specific expertise not available within your company or for repetitive tasks. Many B2B companies were created to fill that void. Whether it's sales calls, bookkeeping, design work, or marketing, there's a company you can hire to do the job.

There's a few downsides to outsourcing the work to another company, however. One is the work will likely cost more to produce in the short term than the rate you would pay employee or an independent contractor. Another con to this option is less control. You may not be able to set the schedule, process, or even result when another company is hired to do the work. And you may still be liable to your client for their work product if you are sub-contracting the work.

An option between hiring and subcontracting/outsourcing is to hire an independent contractor. The benefits include less costs than hiring and maintenance of these workers including lower or no payroll tax liabilities. Your company may specify which reimbursements the job will cover, such as fuel, cell phone, or office supplies. Another benefit to hiring an independent contractor over an employee is the ability to give work to them quickly while in a transition to hiring a new team member.

However, there are a few cons with hiring independent contractors. One is high turnover and less loyalty than an employee. The question on who owns any intellectual property generated during the course of the contract can also be an issue, so make sure it's spelled out in the contract with the independent contractor. The language of the contract can be tricky, so make sure to run any contracts and forms through your attorney’s office before engaging contractors. Also, make sure that the relationship meets your local state’s Labor Department definition of independent contractor versus employee, as there can be severe penalties if these workers are misclassed. Ask your HR department or legal counsel to review the arrangement if there are any questions as to how a worker should be classified.

Finally, if there are systems and/or processes that can be made more efficient to create more capacity for your current work force, that’s an ideal way to handle more work. Though there may be a short-term cost to evaluating your business and implementing new systems and/or technology, the long-term benefits are huge. A more efficient system can produce exponential results as more people and technology is added.

There are many arguments for and against each choice for handling additional work for your growing company. The answer is likely a combination of some or all of these strategies. What works for each company will be based on the availability of resources (time and money) and the company plans for the future. Only you can decide which route is the best for your company. If you need a hand in weighing the options, give us a call. We'd be happy to help you develop and implement a plan for growth in your company.