In just about any business, growth is a central goal. Growth means that you can reach more people with your message, service, or product. And, in an ideal world, business growth also means more profit. Unfortunately, the trajectory of your growth and your profit do not always increase at the same rate. You may find that the costs associated with growing are chipping away at your profit margins. One of the biggest threats to your bottom line is the ever-increasing cost of labor. If your labor costs seem to be growing more quickly than your business then it is time to look at why they continue to increase. Once you have a clear picture of what you are spending for each new employee you can then look at options for reducing those costs.
What is traditional labor really costing your business?
What is the process you go through when you need additional help in your business? Do you post a job listing online and wait for qualified candidates to apply? How much time do you spend sorting through those applicants until you find and hire the right person? The process of finding new labor can be a costly one if it takes up a significant amount of your time and attention. When you are focused on hiring it takes your focus from other areas of your business that likely need attention as well.
Once you find the right candidate the true labor costs really start to kick in. Salary and benefits are the two big ticket items that employers generally consider as they calculate labor costs. However, there are a number of other ongoing costs related to having in-house employees. It will cost you both time and money to train and manage people who join your team. In addition, in-house employees will need space to work and the technology necessary to get the job done. When you have turnover the entire process starts again and you incur the costs related to replacing the employee you lost.
What are your options for reducing labor costs?
The costs of traditional labor will only continue to increase over time. The more your business grows the more help you will need to keep all aspects of it running smoothly. Thankfully, you do not have to just accept the idea that your profit margins are going to shrink as labor costs go up. Instead, you can take steps to reduce your labor costs in key areas of your business.
One of the most effective ways to reduce labor costs in your business is to utilize outsourcing. A high quality outsourcing company can help take care of a number of important aspects of running your business at a fraction of the price you would pay an in-house employee. One of the reasons you can get outsourcing help for less money is because you minimize many of your overhead costs. You do not have to provide benefits or a physical space for the people you hire through an outsourcing company. Instead, you pay only for the tasks you need completed. In addition, you do not have to deal with the frequent training and managing that comes with in-house employees. You will work directly with your contact at the outsourcing company to establish your expectations for training and work quality. Then, the leadership at the outsourcing company will make sure the team working on your project has the necessary training and supervision. Outsourcing can provide you with the people you need to get the job done at a fraction of the cost you would spend on traditional labor.
It is natural for some of your costs to increase as your business grows. But, you do not have to resign yourself to exorbitant labor costs and a shrinking profit margin. Look into the options and cost savings that working with an outsourcing company can provide.