With staffing one of the largest operating costs for businesses, one entrepreneur has a more flexible approach to hiring employees that puts less financial burden on his business.
Calling it a ‘pay as you grow’ model, Mat Collett – a serial entrepreneur whose latest venture is specialist sunscreen maker Solar D – says he has intentionally kept his business ultra-lean in terms of staff levels, in order to allow funds to be redirected into product development.
“That’s been another … important key model of the business that I run is keep it very, very lean and outsource as much as possible,” Mat explains on the My Business Podcast.
“We outsource everything: from manufacturing to sales, to marketing, to PR, to distribution. In that way, sure, you’re cutting your profits but you’re only paying as you grow.
“There will be a point where we’ll start to bring I guess, people onboard as we grow, but at the moment in our space, the outsourcing, especially in the sales and marketing, you can get some brilliant teams out there which you don’t have to pay for unless there’s success.”
Mat explains that his business has just four employees and two directors.
It is a model he recommends other business owners adopt to allow them to speed up their growth. However, he admits it may not work for all industries.
“I can’t talk for many other industries, but in our space, there are some amazing groups that specialise in just sales or specialise in just marketing or just PR, all the distribution, warehousing … there are so many groups you can actually pick to fill those gaps,” he says.
“That made it easier for me to make that decision to say, ‘Why bring someone in-house when we can actually use experts in the field to fill those gaps?’”
My Business is curious to know how Mat feels about being in control of his workforce when most the vast majority is outsourced – a common feeling among many business owners which leads them to bear the cost of in-house staff.
However, Mat feels that there is no loss of control by taking on outsourced workers and contractors, as the requirements of the role remain the same, but the burden of cost as well as issues of people management are largely eliminated.
“I don’t think we lose control, because you still have to control those groups to make sure they’re delivering and getting the right message across, depending on what they’re doing,” he says.
“You can still hire and fire a group, their performance is based on success – no different if you employ someone.”
He adds: “I think employing people these days is more difficult because [of] the rules that govern what you’re allowed to do with employees whether they perform or not perform. Outsourcing, it’s easy as far as I’m concerned and I think it’s a good model.”
Hear more insights from Mat on everything from product development, sourcing distributors to regulation and dealing with larger competitors on the My Business Podcast.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.