Compound Profit Blog

By now, there is hardly a businessman who has not outsourced some aspect of his business to a local or offshore outsourcing provider. Usually, we outsource the repetitive and distracting administrative tasks of our business, such as answering phones or writing letters, or we find a contractor or sub-contractor to handle all or part of our technical work such as web design, server maintenance or communications networking.

However, we should also think to outsource parts of our business that we may think we understand, and that we enjoy being involved with. That is because an outside provider may look at things with a more objective eye and therefore find solutions to problems we have not been able to solve or notice opportunities that we may well be missing.

Finance is one of those segments of our business lives that we think we must handle ourselves. After all, as much as we may want to convince ourselves that we are in business to change the world, the goal of business is money. To make money, you have to spend money, and to spend money, you have to have money. We often think that only we, the entrepreneurs and owners, should be involved in the financing process. We may pay someone to write a business plan, but that is not really outsourcing a process to our advantage unless we use the services of a professional who really takes an interest in our business and understands what we want to achieve.

Outsourcing financing to a professional means finding someone who will do much more than write a business plan with figures that we provide to her. It means looking for a real professional who becomes part of our business even if he is not a partner but rather working for a fee. That professional should have knowledge of the specific segment of an industry in which the business works, as well as contacts in both the industry itself and in the financial world. Once a professional financial adviser is found, we should outsource as much as possible to him while at the same time providing him with every bit of information he needs. When he does not have the information because it just isn't there, it is important to listen to his suggestions for bringing the business to the point that it can generate that information. 

 

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Discovering the PEO Outsourcing advantages

Let’s face it; we live in an age of outsourcing. Many of us are keenly aware of this when we call into a customer service number and it is evident that you are speaking to someone in another country. In fact, NBC has a new sitcom in its fall lineup called ‘Outsourced’ that is based on the outsourcing of jobs to India. We live in a global economy where profits and stock prices trump the unspoken rule of protectionism but let’s leave that for another blog. Today I want to speak about domestic outsourcing. 

Sometimes employers choose to outsource because it just makes economic sense. Other times employers choose to outsource aspects of their business that are non-revenue-producing or that aren’t one of their core competencies. The transfer of risk is also another common reason to outsource. In fact, while most people don’t think of it as outsourcing, purchasing group health insurance or workers’ compensation is actually outsourcing. 

Nearly all companies outsource some or all aspects of their accounting and payroll processing to third parties. The vast majority of small businesses have attorneys that they utilize routinely for advice on complex legal matters like contract reviews, employment law, and regulatory compliance. So if we try to encapsulate some of the most common reasons to outsource we might say that companies typically outsource areas of their businesses that are non-revenue producing, not part of their core competencies, and that involve risk. 

Many small businesses are unaware that there are vendors who specialize in turn-key, scalable solutions that allow small businesses to transfer many, if not all of the above-mentioned risks and processes. The companies that provide these turn-key solutions are called Professional Employer Organizations or PEOs. Through what is called co-employment, PEOs become the administrative employer of record and become the legally responsible party for group health insurance, workers’ compensation, payroll processing, and employment regulatory compliance. Speaking of regulatory compliance, the first wave of new health care regulations from the PPACA kick in on September 23rd of 2010.  PEOs can help employers navigate these choppy waters while also ensuring compliance and premium stability.

For more information on the benefits of partnering with a PEO, feel free to contact Chad Simpson at peo@cprofit.com or (866) 762-0001.

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