how to expand business?

[nycweb2222]

Has anyone made a successful transition from working @ home to getting an office and hiring employees?

I am looking to expand my company and am not sure if the next logical step is to go out and hire someone. I currently outsource work, but it still requires me to be very involved and act as a middleman. I would prefer to get an office and hire someone local, as it would make it much easier to manage them.

I am of course concerned with the extra overhead this will create, but on the bright side, I might be able to attract larger clients with an office and reduce the amount of hours I spend doing work from home.

Can anyone share your experience with expanding from home to an office? or why you decided not to expand? Anyone have any tips on hiring your first employee?

[balinor]

Personally, I am going to avoid actually 'hiring' an employee for as long as possible simply because of the paperwork and tax headaches (at least here in the US)! Not to mention health insurance, liability insurance, etc, etc, etc. I've found that it is SO much easier with consultants.

Plus, with the tax breaks and low overhead of working from a home office, I just can't justify moving to an outside office.

[eWhisper]

balinor makes some good points.

I needed some employees, didn't want to hire anyone due to all the tax and other issues, and really didn't want to pay for office space since I like working from home. I looked for people with their own companies (people like me who were 1 person companies), or would do contract work.

This keeps me from having the paperwork issues, lower overhead, yet also have the benefit of having people I can farm out work to as necessary.

[krieves]

Yup, outsourcing provides scalability. As projects vary in complexity and intensity, you can hire more or fewer contract resources. The trick is to find good reliable people that are able to produce timely results. Also, you need to make sure they don't end up competing with you.

[Shane]

Remember the cost of getting "out of an employer relationship", amount of notice you are required to give and/or amount of severance pay.

The logistics can be easily handled by an accountant and/or a bookkeeper (payroll).

Contract may be more expensive in the short run but cheaper if you are not sure how long you may keep someone.

Best of luck,
Shane

[nycweb2222]

I don't want to stop outsourcing. Just thinking about expanding and getting an office with at least 1 employee. Outsourcing is great, but it is not always very reliable.

I find it very hard to get away for a vacation or even take a day off. I think after you reach a certain amount of work & income, the obvious step is to expand and get an office. It becomes very hard to manage 10 projects by yourself.

Anyone have any success going from home to an office? or are most happy working from home and never planning on expanding to an office?

[iamlost]

The difficulty is that who you want is yourself!

If you want someone to help manage your projects (as you will still be outsourcing) you are looking for someone who could open his/her own business but hasn't.

When such a person walks (and they prob will at some point) you have a bigger problem than you do now. A partnership may be more viable (and tax friendly) long term.

Also - size does not always equal increased profitability. It is a very big jump in size to get the profitability of scale. Adding one employee may well be a drag, not a boost.

If you don't know how to "wargame" sit down with a good accountant (hopefully already yours!) and cost out various senarios. I think you will be surprised at the results.

[nycweb2222]

I agree with everything you said iamlost. All I'm basically saying is that there is only so far a 1 person company can go.

Having a partner is not an option for me, as I think that will create more problems. I am worried about hiring someone, and after working for me for awhile and learning, they will walk.

Can anyone share their stories with me about how they successfully or not successfully made a transition to an office and employees? For those of you who are happy working @ home, do you think there is much future in that?

[balinor]

I can see myself working from my home office for quite some time. I am an Architect as well as a Web Designer, and I have a team of about 10 consultants I use for everything from graphic design to drafting. When I'm busy, I may be using all 10 of them, when I'm slow, I have no obligation to use any of them. I pay them for their service, and my commitment to them ends there. No guilt in having to keep them busy or not offering them a good health plan, no need to hire and fire as the market goes up and down, no risk of investing tons of time in training only to have them walk...why on earth would I ever want to hire a permanent employee?

If it is a money issue, I mark up all of my consultants prices when I bill them out, so I make money just the same as I would with an employee. From where I sit, there is unlimited earnings potential with very little risk.

As far as large clients, in my experience they don't care how many people I have on staff as long as the job gets done. My overhead is low, which keeps my billing rates competitive, which keeps my clients happy.

Again, why on earth would I want to hire an employee? :)

[nycweb2222]

balinor, do you let the contractors talk directly with the clients? or do you always act as the point of contact? do your clients think you are doing the work yourself?

how do you handle going away on vacation? what happens if a few of your contractors aren't available or disappear?

[balinor]

I always act as the interface with the client. I will occasionally bring in a consultant to speak with the client directly if the topic is specific to their field, but only if I am there. My clients are aware that I use consultants, there is a line in my contract in fact. I will even supply qualifications to the client if asked.

As far as vacation goes, I simply let my clients know I'm going to be on vacation. If they need me, I leave a number where I can be reached, and as a backup I leave the number of my most trusted consultant(s). Most of my clients aren't the clingy type who call me 10 times a week, so it works for me.

Reliability of consultants is handled by having a backup for each of them. If one is too busy, I call the next in line, and so on and so forth. I'd say I have used about 30 different consultants at some point, but I have a core of 10 I like to stick with.

[nycweb2222]

and all your consultants are local?

[Fischerlaender]

I'm getting an office just now; I also hired my first employee two weeks ago. I'm making this step because after three years of work with no vacancies I decided it is time for this transition. But it took me several months to make up my mind for this big step.
So, my experiences are rather sparse at the moment - but I'm very sure this was the right decision.

[nycweb2222]

Fischerlaender, why exactly are you getting an office?

[balinor]

Nope, consultants are all over the place. The Architecture ones are local because they pretty much have to be for legal reasons, but I use graphic designers, Flash programmers and Database gurus from all over the US and even a few in Europe and Asia.

[nycweb2222]

You have never had problems with contracts being unreliable? especially ones oversea's?

[Jaze]

especially ones oversea's

what difference does location make? Individuals can be unreliable where ever they come from...

Just starting my home business now... so can't comment other wise.

[nycweb2222]

nothing against oversea's but it is much harder to communicate because of language barriers as well as the time difference. If a dispute occurs, good luck taking any legal action.

[balinor]

If they don't perform, the don't get paid. Simple enough motivation for them, safe enough for me. We aren't talking million dollar contracts here either, so the risk is fairly small. It takes a while to build the trust level, they start small (a couple hundred dollar tasks) and if they turn out to be reliable, they get bigger and bigger stuff. I have only had one consultant 'burn' me so far, and all it cost me was time as they weren't going to get paid until they produced.

Believe it or not, there are still some people in the world who care about quality, on-time work! :)

[Fischerlaender]

Fischerlaender, why exactly are you getting an office?

My home office would be too small for an employee; so the decision for hiring someone was also the decision to get an office. Another reason (but not the main reason) is, that I think it would be good for my productivity to have a place where I can work without being disturbed by my wife or my son. (So I'll always have the choice to work at home or in the office.) And it gives me a greater flexibility: With an office I can hire some students or part time workers to help me during some bigger projects.

In fact there was not a single reason for that move, but a melange of some very different ones.