Business owners ask me on a regular basis whether it is the right time to grow their company. They may be thinking of hiring new employees, renting new office space, or opening an additional warehouse. Although there are macro-economic factors that can affect such decisions such as a recessionary period, these factors rarely should be the impetus behind making such a decision. Rather, the management microcosm of your business ultimately is what matters.
As we all know from experience, the success of a company goes hand-in-hand with the need for more space. More contracts and more clients mean more employees will be needed. Although a positive outcome for any business, expansion often leads directly to the need for real estate financing. Whether a business expands their office space, adds warehouses for inventory, or franchises a retail business, such growth presents a host of new challenges needing to be addressed while firming up the company’s foundation.
First, if a business owner is considering expansion, the company should be doing well financially and showing a healthy profit margin. It may be unwise for a business in a downturn or a company caught in a rut to consider such growth. If they are careless and applying for large loans without the proper financial considerations, they may be in for some serious trouble. If a company is doing well, however, several other factors need to be considered for a company’s expansion to be categorized as what I’d describe as smart growth.
After years of founding, running, and working for professional employer organizations, I have learned that smart growth is sustained by precise HR management. When a company decides to expand, a common misconception of too many executives is the belief that human resources are not an essential piece of the puzzle. Rather than focus on the nuts and bolts of HR management, they prefer to look at the big picture and the significant investments that are part of such an expansion. Unfortunately, what they often fail to realize is that the nuts and bolts are what hold the entire machine of the company together.
[To read more of James Harwood’s thought leadership click here]
As opposed to being a drain on resources, effective HR management supports smart growth by making sure that all of the bases are covered. To take a baseball metaphor a step further, although rounding first and second base is not as exciting as scoring the game-winning run, such an outcome will never happen unless first and second base are both touched by the runner. HR management supports the smart growth of your company by making sure that all of the i’s are dotted and the t’s are crossed.
However, despite the need for a solid HR backbone, HR at most companies still gets shuffled off to the side. Given the bigger focus on growing a business and staying profitable in competitive environments, I do not find this perspective surprising. In fact, in many cases, it makes perfect sense, and this realization is exactly why HR outsourcing often makes perfect sense as well. By aligning your company with reliable HR practices offered by a professional employer organization, you can achieve the success that you have envisioned while protecting your bottom line.
Indeed, a professional employer organization can help a company consolidate vendors while still accessing highly competitive rates for needed services. As your company grows, the recruitment and selection expertise of a professional organization becomes a key asset. If your company is growing, you want to access the best people in your industry to fill new jobs and help to continue to evolve your business model. Recruiting support means effective hiring practices without a company’s executives being overwhelmed by time-consuming interviews and background checks.
From the perspective of a professional employer organization, the success of an organization begins with a backbone of reliable HR services. If you want to grow intelligently, you need to make sure that quality human resources are in place.
After all, growth is not a one-time event for any company. Preferably, the hope is that such expansion paves the way for future growth down the line. If you want this to happen, such development needs to be smart growth. Many business people are successful because they are big dreamers with big ideas. Successful entrepreneurs have invented many of the brilliant business models that make our country so great. However, big dreams and big ideas need to be supported by a foundation of effective business management. Such business management begins with solid HR services that remove obstacles and lay the groundwork for success.
By ensuring the quality of HR service offerings, a company can avoid issues that potentially could stop expansion in its tracks. For example, a strong employment practices liability insurance (EPLI) policy provided by a professional employer organization is a barrier against damaging lawsuits. An EPLI policy can help ensure protection and profitability for your company as it continues to grow. Moreover, a pool-generated benefits plan helps both attract and retain your top employees.
From the perspective of a professional employer organization, the success of an organization begins with a backbone of reliable HR services. If you want to grow intelligently, you need to make sure that quality human resources are in place. By making sure the nuts and bolts are in place and providing high-quality HR services, a business owner can expand their company while protecting their bottom line. Whether the immediate goal is hiring more employees or adding new real estate holdings, smart growth is the key to keeping the door open to future growth as well.
[For more on CoAdvantage’s approach to Human Resources click here]