Author: Spence Novick (TAP Financial Partners)

The good news is your small business is growing. The less good news is you’re facing a tough decision on whether to hire employees to handle the additional workload or outsource to professionals outside your company. Either or both options may be viable in your situation, so let’s look at the pros and cons of each.

What are the pros and cons of hiring and outsourcing employees?”

If you hire employees . . .

When you hire employees directly, you have their full attention. They will get to know your company and be dedicated to helping it grow. After all, their livelihood depends on its success.

Additionally, hiring employees directly helps you build a company team, which can be more attractive to investors than a company full of freelancers and outsourced workers. Plus, your in-house team will be available to fix problems as they arise, and they’ll be more proactive about finding ways to avoid problems in the first place.

The main thing holding business owners back from hiring a whole team of employees right away is money. When you hire direct employees, you’re committed to paying a set amount of money every month, regardless of how much work gets done or whether that work results in revenue.

In addition, there are more costs on top of an employee’s salary. If you hire employees as W2 workers, you’ll also need to pay for taxes, insurance, and benefits. You can expect to spend 1.25 to 1.4 times an employee’s salary in extra costs.

If you outsource . . .

Not having to pay for overhead, taxes, or benefits is a significant advantage to outsourcing for your business. Additionally, outsourcing can make sense when you don’t have enough work to pay someone full-time for a specific job function.

For example, suppose you are redesigning your website. In that case, you might outsource the work to a digital marketing agency or independent contractor since you won’t have more work for them after the project is completed.

However, some outsourced workers won’t have the same commitment to your company as direct employees. Additionally, you’ll need to vet your outsourced workers to ensure the quality is up to your standards and expectations. It might take some time and money to find an outsourced agency or contractor that meets your expectations.

Bottom Line

Many small and medium-sized businesses get the best results when they combine outsourcing with hiring direct employees. This approach can help your business grow without overspending on resources.

If you need expert advice about the best ways to maximize your business profits, we can help. Learn more about the TAP ecosystem or contact us today to get started with one of our many services.

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