No doubt, your business relies on good people (team work makes the dream work, right?). But that means it also relies on you to build the right team of people. And to do that, you need to understand when to hire, and when to outsource.
There is no hard-and-fast rule for when to hire staff versus when to outsource certain roles and positions. To make this decision, you need to look carefully at your company’s unique needs and goals. You also need to understand the difference between outsourcing versus hiring staff, which we’ll cover below.
Outsourcing vs Hiring For Your Business: The Basics
First, let’s cover the basics.
When you outsource, that means you find an outside independent contractor to handle certain roles and responsibilities. Contractors are generally hired for a specific project or task, and/or for a set period of time.
Companies often outsource important duties that are essential to their success, but outside their expertise. This often looks like working with outside marketers, web developers, or virtual finance teams. Because they’re independent, when you outsource to contractors, they’re essentially in control of how, when, and where they complete their tasks. That’s why you need to be upfront about your expectations when you take them on board.
Meanwhile, when you hire, that means you’re taking employees on board. In other words, you hire staff members, either full or part time.
Unlike with outsourcing, you have much more control over hired employees—you get to determine how, when, and where they work.
Outsourcing vs Hiring: The Nuances
So what’s right for your business? The honest answer is that it depends.
When you hire staff, they have many rights, such as termination rights, the right to a final pay cheque, and sometimes severance pay. You’re required to withhold payroll taxes (CPP, EI, etc), and most employees will expect certain benefits like health care and sick leave. When you combine this with associated HR and accounting costs, employees are usually much more expensive than contractors.
That said, employees are often worth the extra expense. That’s because good employees will be with you for the long haul, making up in loyalty, commitment, and stability what they may cost in strict dollar terms.
Outsourcing is often much cheaper, but it’s important to only outsource the right type of work or projects. Outsourcing is usually the right choice for shorter, one-off projects, or for bringing in outside expertise where you can’t afford to hire full time staff.
Outsourcing Your Finances
Outsourcing your finances is almost always the right choice for startups and small- to medium- size companies, or anytime budget is a concern.
This is because managing your finances well is critical to your business success. And handling your finances is incredibly complex, best left in the hands of expert accountants—but hiring a full time CFO can get expensive really quickly.
On the other hand, when you work with a virtual CFO who offers fractional services, you can get exactly the support you need, at a price you can afford.
Plus, a virtual CFO can help you with other strategic hiring choices. That means you can outsource this one position, and gain well-informed guidance into what else you should outsource (win-win).