Hello, it’s Emma Mills here, and welcome to this week’s episode of Mi TV.
I’m going to masquerade as Rachel Riley and get deep into the numbers of employing versus outsourcing.
Adding a team member to a business, I think is probably one of the most, scariest decisions most business owners make, it quite rightly feels like a big decision in that you’ve got someone adding to your team where you’re responsible for their salary, for finding the money, for adding them into the team, for training them, for recruiting them, for giving them a good, a nice workplace. And quite rightly, it is quite a big decision for any business owner to make first time around. And there are just a couple of myths that I wanted to dispel today, but mainly of what it’s like to employ someone and to use an outsourced person.
So in both cases, my myth number one is you never need to make that decision based on the full year salary. So you don’t need to think, am I going to be able to find 25 grand this year to pay him or her because you’re never in it for 12 months?
You know, don’t sign a contract with someone for 12 months with my pay. When you use RPA support, you don’t sign a contract for 12 months. It’s a one month cancellation notice. So all you ever have to think is, you know, if it’s an employed or an outsource support, kind of. Do I have the money for this one. Next month, maybe three months in advance tops? Because in either situation, you’re going to find out over that period of time, whether they are the right person for you. And so the amount that you’re in for is only ever really the first, second, third month salary top. So never think of the decision in the big picture because, you know, people can work out and they cannot work out. So just think of it like that. So that is myth number one. Don’t think of the whole salary. Can you afford it? It’s overwhelming, and it’s not really an accurate portrayal of what you need to find. Myth number two is about the cost of outsource and the cost of employing people.
So now I get all Rachel Riley with an employed person. Whatever their salary might be say, it’s 24 grand. An employed person is generally about 1.4 times the salary of that’s what it costs you to employ them because and so with an employee person, you’re responsible for their national insurance, which I think is about very specifically 13.8% So this is coming up clearly on the board and you have got their pension, which is like it’s mandatory to add them to a company pension as well. Now So pension is about all in all, I think 8% I’m assuming that you are going to have to buy them some equipment, whether it’s a laptop tools, whatever it is they are doing for you. So you need to factor into that IT equipment and whatever they need access to or licenses and the big number, which is quite hard to really pin down. And for those companies that have spent longer investing in this, it’s going to be a much bigger. But the cost to recruit and retain that person is kind of it’s a difficult number to pin on because, you know, when you recruit someone, you know where you work, you spend a lot of time at work. And so you want to deliver that person, a place where they enjoy working. They have good relationships, communication, they learn, they have job satisfaction. And all of that stuff is, well, it’s quite in depth and it takes time to build and it takes money as well. So managing, recruiting, retaining, making sure that the team member is happy having once the ones with them, managing when they are. Also, the other thing I’m here to factor in is, you know, sickness holidays, who is going to do that when? Who is going to do that role, when they are not there and obviously meeting, it’s just all of these things that you need to factor in as well.
Now most people think that an outsource person is outsourcing can never really be a part of the team in the same way. And so my myth that I want to dispel today is that there is a solution out there if you are in that situation where you need some help because I know what that’s like. And you know, when I started as a freelance va, I know what it’s like to build up your hours, build up your hours, get more customers and get to the point where you’re like, Oh my god, there is not enough hours in the day. I need some help, and my very, very first person that helped me was not employed because I didn’t want to and I couldn’t commit to this, and I didn’t have the time to like to recruit properly, to retain them, to manage them, to have one to ones to really to be a manager of them. I didn’t have the time to do that because it only me. And I think there’s an element of when you are growing your business, people only have a look at these costs here as to whether they have it in the bank. And one of the biggest areas you must always look at is whether you have the time, the money and the inclination to do all of this, which is train recruit, you know, retain. Helping them manage them, make them happy, make them stay with you for a long time. There is nothing more costly than losing people and recruiting constantly. And so if you are in this mindset or situation whereby right now you just need a solution, I really urge you to look at an outsourced solution because not only does this go, you’re no longer responsible for this. With virtual companies like my pay, you no longer have to look at, you know, look at this element of time and effort because while a while, albeit albeit that should create a relationship with the person you’re working with. This becomes somebody else’s responsibility, i.e. at EPA.
It’s our responsibility to make sure our team are happy, trained, skilled, ready to go. Relationship builders and ready to slot straight into your company. So I think rather than when you need help rather than thinking, have I got 25 grand plus the rest to employ somebody? I mean, that’s easy to loan to find money to.
It’s this bit, which you really should deliberate over. Do you, as a business owner, have the time to manage this person? Make sure they’re happy, you do the hr, do everything that comes with dealing with people and, you know, to have to have a really good business. People, people around you, you need to manage them, but it doesn’t necessarily have to be your responsibility. So my big takeaway for today and I hope it gets your head out of the dirt into the cloud is that when you’re making that decision to go employed or outsource whilst looking at the cash flow and the funds of paying. That way, the big decision to make is if you have the time and resource to manage that person or you just need them to slot in and take stuff off, you get the job done and let somebody else manage that.
If you want to talk that through any more about what it’s like to work the virtual pay, how quickly they can get started, how much they can just slot into you and your business, you know where I am and just reach out for a chat because I hope this episode gets your head out of the dirt into the cloud and much quicker and closer to finding the right person to work with you.
See you next week. Bye bye.