Rags to Wreckages... to Riches

Are you wasting money? But more importantly, missing out on talent?

Dear successful entrepreneurs,

Here is my warning…

Just remember if you do employ traditionally (and ignore the freelance model), here is what you will be paying for sooner or later.

• paying for stationery to make your employees feel comfortable and valued
• paying for storage to store the excess stationery they order
• paying for staff to file bits of paper in the endless lever arch folders they felt they needed in order to do the job
• paying for someone to reduce the filing and throw away the useless information stored
• paying for an intranet to allow triplicate filling of digital copies of all items filed
• paying for server costs to allow maintenance of digital files
• paying for someone to go through all the digital files and delete them all

and then

• paying to provide email support when staff break their email accounts
• paying to stop your staff doing silly things, like downloading viruses or looking at pornography
• paying for human resource staff to listen to their whinges
• paying staff to smoke cigarettes
• paying managers to provide written staff objectives which staff can then safely ignore
• paying staff to have new ideas on how to do things better, which ultimately don´t work and then paying someone else to take down the new idea and get on with doing it the way it works best

and then

• paying for staff to have grievance procedures which can be brought against any managers whether legitimate or not – all payable out of company time and resources
• paying for senior management to sit listening to pointless complaints
• paying for someone else to wash up the mugs that staff use and don´t wash  up (do they do that at home?)
• paying for the tea and coffee
• paying for someone to clean up behind them
• paying for management to regularly walk around the office to ask staff to please throw away old paper, bits of sandwich left-overs and old newspapers and magazine

and then the obvious stuff

• paying for holidays
• paying for sick leave
• paying whether they do their job properly or not
• paying to hire staff (recruitment fees)
• paying to hire the temporary replacement when on maternity or paternity leave
• paying for someone to fill a key role during maternity
• paying to make weak staff members redundant because firing average performing staff is too long winded and every business opts for the more expensive but quicker route of redundancy
• paying for holiday rights accrued whilst on maternity leave (whilst also paying the person who fills the maternity role the same holiday rights)

and then

• paying for an internet connection to allow them to keep on surfing whilst in your office
• paying to post personal letters and provide their homes with a suitable supply of pens
• paying for mobile phones and laptops so staff can work from home on Fridays and have a nice long weekend

Okay, you think I’m being a little extreme? I promise you, I have seen all of these in the business I created and it was a problem of employed staff and never an issue with freelancers and contractors.

I do accept that if you have contractors in your office, which you will almost certainly want to do, that you will have to pay for their office space too and provide tea and coffee etc. You may even pay them slightly more such that there is no real National Insurance or employers tax saving (it might just get paid to the freelancer to allow him to cover these costs himself).

However, in my recent business which ceased training in Aug 09, I did not encounter abuse of these or any of the other issues with freelance and contracting staff; only with the traditionally employed.

The point here is not that using freelancers and contractors is primarily about a tax saving – although it may a secondary benefit – it is that you have a different grown up relationship with fellow business people who share your desire to make the project work.

And, you have the minimum of distraction from achieving the goals of the project because you do not have the bureacratic and overbearing risk of employment law hanging over every decision you make like the sword of Damocles.

Do you know the story of Damocles? It is worth knowing and no, you don’t want to be Damocles.

Instead, if you are an entrepreneur build a business which stays true to its founder – entrepreneurial. Build a business that is exciting and focused on achievement of goals and objectives and the fun and enjoyment that comes with that.

Find the best freelance and contractors you can. Pay them well, pay them fairly and a bit more. Share bonuses with them if you have financial success. Create an atmosphere of business partners working together to achieve win/win results.

You will have more fun, your team will have more fun, you’ll all perform better and you’ll all get better results. And yes, you will save money too – but this isn’t about saving money – it is about creating the right atmosphere in which success is most likely to flourish.

Be brave and do it and don’t compromise. After all, you do call yourself an entrepreneur don’t you?

Tags: business failures, freelance employment strategy, freelance working, problems with employment law, rags to wreckages