What made you go into business in the first place? Was it passion for a certain trade, an exciting idea for a new product, or the thrill of opening your own company? While these are admirable reasons to start your own business, they cannot guarantee success on their own. The harsh reality is that within five years 50% of businesses fail. There are a number of reasons why this is the case, as well as evidence that a PEO can alleviate the pitfalls of each one.
When a business fails, 82% of the time it’s because of cash flow issues. This may come as no surprise since it takes money to make money, but it requires every business leader to take a deeper look. Where is your capital going? Is the rising cost of benefits too much to bear? Is the CFO shouldering HR duties and not able to put their full attention on fiscal health? Is employee productivity dropping? The questions can go on and on since nearly every issue a business experiences can negatively affect their bottom line.
A skilled PEO can positively impact your bottom line in several ways. Improved employee benefit options make a big fiscal difference. Likewise, well-managed employees perform to their full potential, increasing productivity and avoiding slowdowns. Your executive team can focus on leadership and not on HR activities. In short, a PEO makes sure nothing falls through the cracks and represents a more cost-effective solution than building an HR department from scratch.
According to Forbes, one of the chief reasons businesses fail is leadership breakdown. That begs the question: is your staff fully trained? Managerial training is often overlooked yet makes a dramatic impact on the bottom line of any business. Employees pattern themselves after their leaders. A good example must be set, but more than that, managers must understand how to speak to subordinates, manage employee conflict, address harassment/discrimination, and much more.
Partnering with a PEO ensures that managers are completely trained and getting full output from their staff. Disorganization is alleviated from the top down through time-tested training frameworks. A strong PEO has tremendous experience from inside many different companies and can bring best practices to your door. Beyond managers, employees receive excellent soft skills training that helps them communicate and work together toward shared business goals.
Increased Turnover and Decreased Engagement
Your business cannot thrive if it’s a revolving door of personnel. Good retention is necessary so that employees can dig into their roles and gain the unique expertise that only comes from working inside your company. 23% of businesses fail because they don’t have the right team in place. When a weak HR department is running the show, or if no dedicated HR staff exist, employee engagement takes a hit and the right team can never truly be assembled.
Things are different when an expert PEO places an on-premise HR Specialist inside your company. Employees know who to turn to and feel taken care of because that HR Specialist is a clear part of an employee’s professional life. Not only does this improve retention, but it gives hiring a boost. The recruiting, vetting, and onboarding processes are smooth, and that translates to a great candidate experience and happy hire.
Poor Risk Management and Compliance
Running a business in 2018 often feels like it’s more untangling complicated laws and regulations than actually attending to core business matters. It’s difficult for anyone but the most skilled HR professional to understand what changing employment laws or new tax laws precisely mean for your company. With so many areas of liability to consider such as worker’s comp, harassment, discrimination, and more, it’s no wonder countless companies have accidentally fallen into one or more devastating violations.
With continued success in mind, it’s wise for your business to have an HR function that knows every code, bylaw, and protocol affecting operations or employees. The right PEO has this expertise and can bring it to the table, effectively taking a massive burden off your shoulders. For example, focusing on employee compliance training can be an excellent start that immediately lowers business risk and liability. That directly translates to a safer, more secure, and healthy organization.
Avoiding Business Failure with the Right PEO
It’s not easy to successfully operate a business, but many problems that take down companies can be avoided. The top reasons businesses fail illustrate how important a strong HR department is to longevity, and that’s why a PEO can make a huge difference. However, not all PEOs are equal. Unlike others, Synergy puts an HR Specialist in your office so that their expertise is just a step away.