Can You Subcontract That? What Other Professional service companies’ Are Doing That You Aren’t…
Overhead kills professional service companies. Office space, computer systems, phone or PBX set up costs … oh, yeah, and labor costs (which make up at least 70% of a professional service firms costs).
All of these form a recipe for disaster unless you are thoughtful about how you approach these challenges because as your professional service company grows, you may find your costs spiraling up and your profits dwindling down. There are plenty of answers to this, from CRMs to great leases, but we’ll cover that in another blog. What we want to talk about is getting subcontractors to help you out.
Now, contract work is not a dirty word and not all contract work is skilled labor, either. In fact, if your Professional Service Company is just starting out, the best subcontractors you may need to hire are simply an office cleaning firm and a business lawn care service. However, as your practice grows, you may need to consider additional resources. For example, what about a CFO? That’s a sure-fire six-figure job, but a “virtual CFO” can be a part-time (often called fractional) executive. In a move that some folks in the industry find shocking, the concept of an executive officer that isn’t an employee is a great way to get new ideas on profitability and taxation, but not having the risk of meeting payroll for a highly-compensated employee.
Some professional service firms hire virtual employees to handle any number of tasks, from email to sales follow-up, and need never set foot in the office. In fact, many may not even set foot in the country, and the rates that you would pay for their services are more indicative of the hospitality industry than a professional service company. However, the skill set is top notch (123Employee is an example of an outsourcing firm) and opens a whole range of minor tasks that can be “subbed” out and keep your bottom line clean from unnecessary overhead.
Bottom line? By using subcontracted employees, professional service companies can gain a smart edge on the competition by keeping costs down and raising productivity – and you need to be doing that, too!