Small Businesses – Winning Economics of Hiring Part-time

8.4.15 by Gwenn Rosener

April, 2015, FlexProfessionals, LLC.

If you are a small business and have not considered incorporating part-time employees into your staffing model, you should.  The economics are there and they are quantifiable.

At FlexProfessionals, we work with hundreds of small business, all of whom are grappling with similar challenges.  They must contain costs to fund growth.  They are cash constrained.  They are highly vulnerable to market uncertainty.  And the costs of mistakes are high.  To deal with these challenges, many of our clients have turned to hiring part-time as a winning organizational strategy for these compelling reasons: (1) accelerated growth, (2) variable cost structure, (3) bang for talent buck and (4) reduced cost of missteps.  Here is why…

Accelerated Growth

What if you and your senior staff could spend all your time cultivating new customers, branding and selling your services, and planning your next strategic move?  It is what you should be focused on, yet so many times we see business owners mired in day-to-day operational details or single-handedly juggling every new lead, new contract or new marketing push.  Their logic?  They can’t afford to hire someone.  They don’t have time to train anyone.  The business needs to be bigger before additional resources are really necessary.  So they limp along distracted and teetering on a fragile infrastructure that may falter if and when their market takes off.  They are stifling growth.

Hiring part-time professionals has huge economic value in this case because the benefits of freeing you and your critical staff up to focus on growing the business far outweigh the costs of one or more part-time resources.  Take for example one of our clients who hired a part-time bookkeeper 20 hours a week at $27/hr, a part-time CFO for $2000/mo, and a part-time marketing manager 20 hours a week for $35/hr.  What was probably consuming close to half of his week was now being done for under $7000/mo allowing him to accelerate his efforts to prepare and launch a franchising arm of his company that could potentially double or triple the size of his business.  His company made Inc. Magazine’s list of Fastest Growing Companies.

Variable Cost Structure

How much more profitable would your business be if your employee costs were directly tied to revenue?  If there was no idle capacity in your organization yet plenty of potential capacity to take on new work as business came in.  Walking the line between overstaffing and understaffing is difficult for small businesses because the hiring needs come in small increments.  But hiring part-time can help you calibrate your organization and keep it as lean as possible while you’re growing.  We’ve found in our candidate pool of part-time professionals that many are looking to start with reduced hours, but can ramp up in hours as the business grows.  It is the best of both worlds – pay only for the hours you need now, but groom a resource to take on more hours as volume picks up.

The way we’ve structured our own business is a good example of keeping employee costs in line with revenue through part-timers.  Our sales have grown over 60% each year.  We have a staff of nine, all of whom are part-time including an accountant and a recruiting assistant both of whom started with fewer than 10 hours per week and have doubled those hours as our business has grown.  In addition, our sales reps all work between 20 to 30 hours a week, but their hours and pay are tied to the number of jobs they’re winning making their payroll proportional to sales.  We have created a cost structure that is almost completely variable, leaving only a small fraction of our costs that are fixed.  We are a lean machine and many of our clients have adopted similar hiring strategies to keep their costs down and their margins as high as possible.

Bang for the Talent Buck

Are your employees a-players, b-players or c-players?  Have you been unable to hire the most talented candidates because you can’t afford them or lose them to bigger, meatier large-company offers?  Then you may be overlooking one of the most qualified, affordable talent pools out there, especially for small businesses.  The part-time talent pool isn’t what it used to be and it is becoming more and more significant with the demographic changes underway.  The new part-time talent pool is full of a-players.  Some are the sandwich generation, who have scaled back at the peaks of their careers to care for children and aging parents.  Some are retirees who want to keep working.  Some are freelancers.  They have strong educations (many with advanced degrees) and glowing professional track records.  But they CHOOSE to work part-time and they are a bargain.  The candidates in our pool have rates 20% to 30% or more below market because they see flexibility as part of their compensation.  And most don’t need benefits, providing additional savings.  We can list case after case where clients have hired part-time professionals and been amazed at the immediate impact they’ve had on their organizations and the bang for the buck they’ve delivered.

Reduced Costs of Missteps

Does your staff have the knowledge and experience it needs to make sure your company complies with employment laws, IRS rules, DCAA or other regulations and that you have the proper controls in place for managing cash, keeping the books and hiring employees?  Or are you or a staff member trying to learn all this on the job while doing a hundred other things and crossing your fingers things don’t go south.  The cost of exposure in these areas can be great in terms of potential fines, lawsuits, lost contracts or lost funding.  But a few small injections of the right part-time talent can set things straight and go a long way towards establishing sound processes and procedures and mitigating risks with experienced-based knowledge and know-how.

Conclusion

Convincing companies to hire part-time professionals can be a hard sell, especially for large businesses that have big budgets, big HR functions and big staffs.  But for small businesses, hiring part-time should be a no-brainer.   Not only can it enable the primary focus to stay on growing the business, but it keeps costs down, margins healthy and facilitates the building of a stronger, more efficient and reliable platform on which to expand.

Gwenn Rosener is one of the co-founders of FlexProfessionals, LLC, a niche staffing company that specializes in sourcing professionals for part-time, project-based and flexible work arrangements at a fraction of traditional employee costs. Contact: gwenn@flexpro.wpengine.com.

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