When your business starts to feel like it’s getting out of hand, or you’re just feeling overwhelmed by how much you’ve got to do, the first thing we often think we should do is hire an employee. There is a lot to consider when hiring your first employee (and I will get to that), but in today’s post I want to chat about the differences between hiring an employee and outsourcing, and when to use each of those methods.
Firstly, let’s define the difference between them. Hiring an employee is when you have another person in your business who you need to look after – pay them, train them, manage them, keep track of them, pay all the associated costs. Usually they work in your actual premises, even if your premises is your home kitchen. Outsourcing is when you don’t hire anyone, instead you give a task (or several tasks) to another company or person external to your business. You pay them based on the specific job they do, you are not responsible for any of the infrastructure involved in having them as an employee (insurance etc). Usually their work is done at their own premises rather than yours.
The first thing I suggest you do is to identify the jobs which need doing, and then define which are your weaknesses and strengths. What are you good at? What do you absolutely hate doing? What kinds of activities are essential to the business’s long term success? Are there any activities which you might enjoy, but can be easily done by someone else, thus freeing you up to do the more important tasks? What’s currently eating up your time? As a business owner your time is both more in demand and also more expensive than an employee’s will be, so there would be no value in (for example) paying you to make ganache when someone else can be doing that. Think about your strengths and weaknesses from a business sense. Are you great at the numbers and spreadsheets, or do you hate them? Are you great at marketing and social media, or is that a chore? Does baking the naked cakes take days and days of your time, when you could be answering quote requests?
Once you’ve developed that list, you can start to determine which of those things you could reasonably hand off to someone else. Determine which of those tasks are directly impacting both your business growth and the use of your time. Then, decide if those jobs need to be done in house or not. When I was growing my business, I found that initially outsourcing jobs was of more use to me than hiring. At that time, the biggest ‘boring but important’ job I had (and hated with a deep passion) was bookkeeping. I was handling all the cake stuff just fine, but I was making a mess of my bookkeeping and it stressed me out a lot. Money, taxes and financial paperwork are vitally important to a business and there I was screwing it up and hating it – so I outsourced it to a bookkeeper. Sure, it wasn’t cheap, but what it cost me in money it more than made up for it in time, effort, and stress reduction. If I had been good at that paperwork stuff, but terrible at (or hated) ‘basic’ cake tasks like making buttercream or cutting our hundreds of flowers each week, I probably would have hired a staff member rather than outsource.
Basically, the decision to hire or outsource will depend on what jobs actually need doing. In the first instance I usually recommend outsourcing the speciality tasks and/or the very time consuming ones- because you’ll get the most immediate value out of those tasks being done efficiently and professionally. If you can get all your financial paperwork sorted out or if you can save three days a week in baking time, that’s doing you a whole lot of good. Remember too that as your business grows, you can always ‘take back’ the tasks you previously outsourced. Suppose you get to the stage where you hire an admin assistant – that person might have finance skills and could do your book work for you. Or if you’ve outsourced your flowers, you might find that one of your employees is then happy to get trained in flower making and you can bring those back in house again.
Outsourcing can apply to a number of tasks. There are plenty of virtual assistants, social media companies, bookkeepers, flower makers, naked cake bakeries and so on which can help you get a handle on your business. You don’t have to be everything to everybody all of the time. You may also just need to outsource for a short period of time, perhaps during peak wedding season when your time is shorter than usual. Outsourcing is great for small businesses because can fill an immediate gap and the risk is generally a lot lower than hiring an employee but it’s also potentially more expensive.
Many of you have asked me when you know it’s the right time to hire an employee. You can’t know the answer to that until you’ve worked out what you need help with the most. Knowing what needs doing and why is the first part of working out if you should outsource or hire. Remember that when you make the list of tasks which need doing, it’s not just about what you love or hate doing, it’s also about what jobs (when done by someone else) are going to free up your time to work on your business and not just in it.