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In most businesses, customer demand is unpredictable and can vary from week to week. Learn how you can use a flexible workforce to handle unpredictable workloads.
For business owners, there are few things more frustrating or wasteful than paying an employee full salary even when business is slow
If demand for your product or service is unpredictable, operating without a flexible workforce of independent contractors can cause serious problems for your business. And, if you don’t build up your flexible workforce until the last minute, you’ll waste precious time and money that could be spent on other things.
Balancing your desire for growth with fluctuating demand for your business
The opportunity to grow a business is exciting: finding new customers, taking on more projects, and of course, earning more money. But, as the owner or operator, it’s not easy to decide how you’ll distribute workloads to keep the business running smoothly and to keep customers happy.
Most business owners make hiring decisions based on current workload and future expected workload. But, what happens when it’s hard – or impossible – to anticipate demand for your product or service? What happens when it’s impossible to anticipate future workload, and therefore, the amount of labor needed to handle that work?
Businesses – especially smaller operations – face a major dilemma when it comes to staffing:
If you delay hiring, your team will be overworked. If you hire too soon, you’re taking a huge financial risk.
Let’s look at the different ways that traditional staffing with employees can create problems for businesses:
Problems with Hiring & Firing
Hiring employees is expensive. The Society for Human Resource Management estimates that the average cost of hiring an employee is $4,129. Moreover, they estimate it takes an average of 41 days to hire an employee.
But, beyond the cost and hassle of hiring an employee, what happens if they need to be fired? Perhaps they underperform, aren’t reliable, or don’t get along with the rest of the team. Or, perhaps demand for your business is unpredictable, and you hit a low period. Firing an employee is incredibly stressful, demoralizing, and can be very risky if the employee believes they were treated unfairly.
Problems with Salaries & Related Expenses
Benefits, equipment, insurance, training – any business knows there are huge expenses on top of an employee’s salary. MIT’s Sloan School of Business estimates the actual cost of an employee’s salary plus benefits and related expenses is actually 1.25 to 1.4 times their salary. Salaries stay the same, even when demand goes down. In fact, an employee who is subjected to regular periods of extremely demanding workloads may be more likely to request a higher salary!
Problems with Insufficient Capacity
Even if you are fine with all of the additional hassle and expense of conventional hiring practices, what happens if another big project comes in – or if demand for your products or services suddenly increases? You still may find that you have a bigger workload than your employees can handle. Either A) your employees will be overworked, B) you'll need to reduce their workload by hiring an outside firm to help you, or C) you'll be forced to turn down revenue-generating work.
The Challenge of Building a Workforce of Independent Contractors
If you’re like most business owners or operators, you have a roster of independent contractors you tap into from time to time.
You may try to remember freelancers off the top of your head or keep them listed in a spreadsheet, but either way, you're likely to encounter the following issues:
• Workers may not be available when you need them
• Workers preferences and plans change; they may no longer wish to provide the services they used to provide to you
• You aren’t actively building up your list over time
• When you need another worker – and, by definition, you’ll be super busy at that time – you have to waste time and energy going through the list one by one to try to find someone to help you
If demand for your services or products is unpredictable, having a flexible workforce of independent contractors can really help you grow.
Actively building up your workforce over time is the key to having a team of competent, trusted workers you can tap into on-demand.
The bottom line? Staffing with employees is risky, costly, and doesn’t help you cover the common fluctuations in demand for your product or service. The real cost of managing workers the old way is not being able to grow your business when opportunity knocks.
If demand for your business is unpredictable, operating with an inflexible workforce of employees can cause situations that stifle—rather than foster—growth. The alternative is flexibility: building up a workforce of independent contractors so you can be smart about balancing your resources, needs, and growth.
So, it should be clear why building a flexible workforce is the best way for businesses to manage workload when demand fluctuates. Where should you go from here?
Consider using a Freelancer Management System to help you build up your pool of go-to freelancers!
Jolly FMS (Freelancer Management System), is simple and powerful Contractor Management software to help you streamline the entire process of working with 1099 independent contractors. Organize your crew, coordinate their work, and pay them securely online in a single tap.
Managing workers takes a fraction of the time it took before. This enables us to grow our business faster. Not only faster, but also in exciting new ways.
Founder of Panacea Collective
We can now easily pay and schedule team members in one place. As we drive growth we expect this to continuously deliver significant operational efficiencies.
Founder of Early Bird Tacos
San Francisco, California
We were very fortunate to discover and onboard with this labor management platform. In it we've found a piece of technology that allows us to continue to scale.
Founder of Sourced Craft Cocktails