While it is empowering to make or build ourselves, is it profitable? This topic is extremely important to analyze and identify in business. Honestly if you are going to bake a cake for a special occasion it makes sense that you are not going to be worried about the cost because emotion is the motivation factor. Meanwhile money and profit are what motivate and keep a business in existence. Thus the importance of any business identifying when and what is best trusted to someone else.

When thinking of the cost of an employee the basic salary is what’s generally accounted for but in reality there are additional costs of having an employee that should be thought of, such as taxes, workers comp, paid time off, etc.. For example, an employee earning $60,000 per year will cost their employer somewhere between $78,000 and $84,000. Another aspect to consider is that every position has a learning curve and that employees are not fully productive right away costing both time and money. It is estimated that it takes at least 1 to 2 years before an employee is fully productive assuming they aren’t fired or quit this long term investment. If we use the figures above, this employee costs $168,000 before it is productive and that is not including the cost of additional company resources such as company phone, laptop, vehicle, credit card, etc..

This is where a business might opt to outsource or partner with another company or individual specializing in an area for a specific contract amount. What can be outsourced you might ask? Well just about everything.

Do you really need to hire an IT specialist or can you partner with an IT company?

Do you really need to hire marketing specialist or can you contract with a marketing company?

Do you really need to hire a payroll specialist or can you hire a payroll company?

Do you really need to hire an estimator or can you work with an estimating company?

Do you really need to hire a painter or can you subcontract a paint company?

Which is more profitable? That is going to depend on what your business is selling. The important thing to understand is that whether you sell products, services or both there is someone you can partner with allowing you to have more money, time, flexibility or whatever is desired.

How do you decide? Do your homework. Find who will do what you need for the price you want and time frame you can live with. For example, you have the option to hire a $60,000 per year employee or hire a company that will do the same amount of work for $60,000 per year. Well an employee will cost $168,000 within the first 2 years and outsourcing is going to cost $120,000 in the same time. Your choice.