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PEOs – Why They Are Essential For Long-Term Business Success
PEO’s or Professional Employer Organizations are companies that specialize in one thing – managing business processes that are not core to your business. There are only so many hours in the day and only so many years in your life and you want to spend that doing what you do best. We all know it. And we know that it’s the only way our company will really grow and make a brand name for it.
So let’s say you are a company that builds mobile Apps. Your company is growing – everyone wants an iPhone app these days after all. You know there is a clear window of opportunity to establish a client base and then grow with their needs. But here are two paths your company can take. So what does this have to do with PEO’s – you’ll see in a minute.
Path 1: You manage everything internally. You are a jack-of-all-trades after all and you’ve hired people like you that can wear multiple hats. Great. You manage sales, marketing, customer service, payroll, Human Resources (of course it’s hard to retain App developers), Development, Design, Copywriting, Project Management, Business Development, Investor Relations, Benefits Processing, Information Technology, Purchasing, Lease and facilities Management – everything. Your justification – it’s too expensive to outsource – I would rather just have a single employee multi-task and get some of these done. And you do get it done and prove a point.
Your company goes from $100k in sales per annum to $1m in sales in 2 years and $3 million in 5 years. Your company started with just one client, and in five years, that old client is still there – you are working on a small ongoing support project for them and you have another 20 clients and 3 in the pipeline. You’ve made it as a small business. You have enough clients to make your payroll and take home a decent paycheck for yourself.
Path 2: You are a business developer. Your partner is a programmer. You two know your work and that’s what’s key to the company’s growth. You have one deal today and you are off to a good start. Instead of aiming for 20 clients over five years, you aim for 200. You aim to be one of THE top App developers in the country in 5 years. And you aspire to be pioneers in staying on top of the next revolution that’ll happen after the App craze is gone.
That’s when you choose a PEO for your Payroll, 401k and Benefits management, HR, even IT in some cases, and Facilities management. Not 10 different companies. Just one that lines up the right people to takes care of those NON-CORE processes for you. Slowly you transition recruitment support, even Project Management, Investor relations, Purchasing, Accounting, Financial reporting, Insurance, etc. to your PEO as well. You do what you do best – build great apps and keep a pulse on the market to stay ahead.
In five years, you have 200 clients and your app is on every other iPhone. Best of all, the App business is your cash cow but you know you are ready for the next revolution – you are already working on it. You are no small business anymore, with $200 million in annual sales.
Now, it’s obviously an exaggeration to say that all that happens only by choosing a right PEO for outsourcing. It’s just an example, but makes a point about how some companies get caught up with the present. They just want to save some money today, generate some cash flow and make a quick buck. They don’t go on to become great companies. If you want to part of something great, start learning more about PEO’s.
About the Author
StaffingMarketplace is a resource and directory for the staffing industry connecting vendors, staffing companies, and Professional Employer Organizations (PEOs). StaffingMarketplace allows the end user to view, select and compare profiles of listed companies in one easy to use website.
