The Hidden Costs of Doing it All Yourself

I remember being around twelve years old when my dad came home from work. He had started his own law practice about five years earlier and business was booming! With a staff of over 15 people, including several other attorneys, he was on cloud nine. He was a successful, self-made entrepreneur who had paid his way through law school by painting houses and was now enjoying the freedom of being self-employed.

All was good, until he had his routine meeting with his accountant to go over month-end closing. It wasn’t even close to being done—as in not closed—as in almost a full week into the next month with the books still a complete mess. My dad, usually a cool cucumber kind of man, wasn’t so cool this time. His accountant told him she was overwhelmed and needed help. Unfortunately, the numbers didn’t make sense to hire another full-time accountant. The innovative and business-savvy Mr. Wulff decided to hire a 1099 contractor accountant. Steve, the contractor accountant, not only helped with tasks his full-time accountant didn’t have time for but, more importantly—and really the reason I tell this story—brought a fresh perspective! Not being caught up in the day-to-day (and let’s be honest) monotonous tasks, allowed him to bring ideas on how to make the law firm's fiscal health even better!

You have waited your whole life to start your own business… okay, maybe not your whole life (that might be a bit dramatic), but I’m guessing you’ve waited at least several years, am I right? Is it also safe to say that you feel overwhelmed most of the time? We live in a culture where being stressed 24/7 because of your workload is considered admirable. But what if you really could have it all as a business owner? And no, I’m not saying you’ll never be stressed, because as entrepreneurs we know that isn’t feasible—you are working for your money, after all. But what if you could focus on the “why” behind starting your business and let the day-to-day tasks run on autopilot? I’m talking about hiring a contractor. Before you turn your nose up and say: “No way! This business is my baby, and no one is going to touch it,” or "I can’t afford to bring on an employee,” just keep reading. I promise you’ll be happy you did.

Whether your business consists of just you or you have a staff of five other employees, bringing on another person is not an easy decision to make. Let’s first dive into the benefits of hiring a contractor to help you focus on the “why” behind your business.

FINANCIAL: The cost of an additional employee varies depending on the benefits provided, but what remains consistent are payroll taxes (government-mandated contributions from employers), overhead costs (indirect expenses incurred by the employee, such as extra utilities), onboarding, and turnover costs. Unfortunately it doesn’t stop there because, as a business owner and depending on the state your business operates in, you may need Workers Compensation Insurance or other types of insurance, including professional liability. So how much does it really cost? The general guideline when estimating the cost of an employee is 1.25-1.4 times their salary. So if you’re paying your employee $30,000 a year, the real cost is more likely to be $37,500 to $42,000. As a small business owner, $7,500 to $12,000 a year can make a significant difference in your bottom line. We’ve talked about the monetary cost of an employee, but what about the cost of your time? The time you spend trying to find an employee, interviewing them, onboarding, and continually developing them is substantial. Depending on your location, the job market may also heavily favor job seekers. Another dollar or two per hour could make the difference for your employee to jump ship and leave you high and dry. Yes, I know a contractor can leave too, but the sunk cost is very different. When paying a 1099, you’re only responsible for paying the set amount agreed upon. You, as the business owner, are not responsible for paying any taxes on the 1099 income!

PERSPECTIVE: Bear with me on this… Have you ever had a fight with a family member? You go to another family member for advice, and you leave feeling like it was biased advice? It probably was because that family member is right in the thick of it with you! Now, have you ever asked for advice from someone who doesn’t really know the other party? Did the advice seem more helpful? It probably did! Having someone help you who isn’t in the middle of the situation can make a big difference. Let me be a bit more specific on how a contractor can provide the fresh perspective you’re looking for. A contractor, by nature, has worked with many other businesses in the past or currently. They are talking to other business owners, understanding their successes and even their failures. Because of this, contractors are always evolving and growing their knowledge. While your business is unique to you and your industry, the pain points and goals are almost always the same at their core.

I could go on for days about the benefits of hiring a contractor for your operations—accounting/bookkeeping, social media, shipping, process improvement, etc. But let’s address the elephant in the room: this business is your baby. How do you know if this contractor is going to do a good job? Let me tell you, as a contractor myself, word of mouth is king! Yes, we advertise, but if you’re not happy with my work, you will 1. Fire me, and 2. Trash me to your fellow small business owners. A happy and satisfied small business owner is the best advertisement we contractors can ask for!

You may now feel empowered to find someone to help with your business, or you may still be on the fence. But if I could ask one small favor from you: evaluate your business goals and ask yourself if those goals align with your current capacity. If not, dip your toes into the contractor water. If you don’t know where you start head over to my connect page and let’s have a conversation!