In these cash-strapped times, reducing costs is always a prime concern to the small- to medium-sized business owner. And what is your major cost centre? Most likely, it’s your people.
Employing people on a full time basis is costly both in terms of salary and all the associated administrative burdens. And employing people that don’t work out can be equally costly (a good reason to talk to Peninsula, if we may blow our own trumpet briefly!)
One way to gain competitive advantage in your marketplace and to harness clever people within your company is to hire independent experts and contractors on a project-needed basis. In particular, if you are a company with a cyclical sales pattern it can really help you better manage your employee costs by ramping up where necessary.
So how do you go about it? Make an analysis of where you think there are gaps in your business and where you could benefit, particularly in busy times, from additional expertise. Look around in your sector for people you think are excellent at what they do, but who operate as one-man or woman bands. Take a look at their website, the contracts they have won, the work they have undertaken and the testimonials they have gained from their clients.
If you’re impressed, arrange a meeting to discuss setting up a loose affiliation whereby when you are busy, you can draw them in on projects under your banner but working as an expert consultant. Invite them to your company to meet your people. Suggest they can hotdesk from your office occasionally or come along to your internal training courses or events. Being a freelancer can be a lonely business and the opportunity to interact occasionally within a larger company can be extremely attractive and costs you very little.
The benefits to both sides are obvious. You get expert advice without the cost burden of a full time employee. They will work mainly from their own home using their own technology to communicate with you, so you save on infrastructure costs. You don’t have to pay them their usual day rate, because you’ve introduced the business to them and saved them the legwork of marketing and pitching. They get business on a plate without having to go hunting and get to work with new people in a professional environment.
The downsides? If they don’t meet your corporate standards or don’t fit into your culture. If they don’t meet deadlines and turn round work quickly enough. If they produce bills you hadn’t expected, overcharge or add in costs you hadn’t been prepared for. Also they could poach your clients if they do a better job than you – or offer a better price on the side. There may also be issues around IT security and client confidentiality to consider.
There are several ways to get around these issues. Do your research up front - make sure you’ve checked out their their testimonials and qualifications. Have a clear contract outlining what they can and can’t charge for and what your expectations are on deadlines, calls being returned and so on. At the beginning of every project have a clear agreement of how many days it will take, and explain that they are obliged to notify you if this begins to overrun. Build in a non-compete clause - although these are difficult to enforce. And, if they prove to be exceptionally good, you may want to tie them in with a financial sweetener so they can’t work for any competition, or base it on their results if your business is sales-orientated.
You may find there are more intangible benefits. By introducing some new blood from time to time into your corporate mix with different ideas and approaches, your own employees can be invigorated and energised or learn more modern practices. The twenty-first century workforce will become very different, very quickly, and why not embrace these changes?
Rethink The Way You Structure Your Workforce
March 26 2010