The latest unemployment figures which indicate unemployment edging higher, is further evidence of my belief that we are headed for a double-dip recession. Heck if anything, we are not continuing down a path to recovery.
I’ve advised clients for years that they should farm out all employee payroll that is not directly tied to their core competency. For example, if you own a child care business, then your bookkeeping, meal preparation, facility cleaning and website design should be farmed out. My reason goes beyond the common belief that you should do what you do best, and leave the rest to the experts in that field.
Because the economy is so uncertain, small business owners need to be as flexible as possible. As Jim Collins put it, you get the right people on the bus (core competency) to start with. If you can do that, and if you’re not tied down with administrative overhead, you can drive and operate just about anywhere, doing anything.
I have many examples of small business accounting tasks we’ve taken over that used to be part of an employee’s job. In every case, we improved the bookkeeping process, produced more accurate results sooner, and saved the business owner lots of money. In one case, we took a 40 hour per week bookkeeping job in Raleigh and trimmed it back to 17 hours per week!
More to the point, I’ve seen too many instances where a big client dries up and the small business can’t react fast enough. While they’re pondering their options to replace the lost work, the overhead expense engine keeps running. It’s much easier to cut back work you’ve handed over to a subcontracted service, than it is to cut hours on an employee who’s depending on a steady paycheck.
Consider turning your employees into a variable cost, tied to the work at hand, rather than an overhead expense line item. If you’ve gone down this road, has it worked for you? Please let me know in the comments section.