Government contracts offer a long-term and stable source of income. They are very tempting for most small to medium-sized businesses, but the initial investment required to land these deals can be a big barrier to entry. To tackle capture management, you often have to juggle the option of hiring someone full time or working with a consultant.
Looking at a sudden jump in employee costs before you land the business to support that jump can be nerve-wracking, but there are ways to control those costs. And working with a consultant can be a cost-effective way to handle your capture management.
Comparing Costs: Full Time vs. Contractual
When you’re adding or expanding your capture management process, you have a couple of options. You can hire a full-time employee or bring on a contractor to help. Before you decide, you really need to take a long, hard look at the pros and cons of each option. A full-time employee will dramatically boost your potential productivity, but that only matters if you have enough work to keep them busy. It’s important to remember that an average compensation package costs well above the negotiated annual salary. Just adding benefits and taxes on top of salary can work out to 140 percent of the annual wage.
Once you figure in additional costs like space, equipment, technology expenses, non-billable hours, etc., the total cost can reach more 275 percent of salary. Of course, in addition to the basic expenses, you’re looking at an extended onboarding period and considerable time invested before the new hire shows any ROI. The bottom line is that hiring full-time staff is expensive, particularly when you aren’t sure of the level of work available on an ongoing basis.
Hourly, Retainer, Incentives: Keeping Contractor Costs Low
With contractors, the hourly rate can be a lot higher than you would pay a full-time employee. If you would pay a full-time hire $50 per hour, you might pay double that to a contractor. The value proposition comes in when you realize that you control how many hours they work. Plus, you only pay for work directly related to your capture management process. Your consultant never spends time manning the phones, meeting with HR or dealing with filing.
If you only need the extra help for three months, hiring a consultant is a lot like shopping end-of-season sales. You get the same quality at a fraction of the cost. Some businesses recommend only staffing to 85 percent of your predicted need. Contracting out the rest gives you the flexibility to handle sudden fluctuations in the amount of work available.
In addition to controlling the number of hours, you have several options when negotiating pay rates with contractors.
Hourly is only one method. If you need someone to come on board full-time, a retainer model can keep your costs level during that time. If you need to lower your initial investment, you might negotiate a lower hourly and a success bonus for every landed contract. Consultants simply offer more flexibility for your capture management.
Consultants Can Deliver Instant Value
In addition to the added expense control, you should remember one of the other big benefits of working with a consultant — expertise. Hiring someone with the same expertise that a consultant brings to the table can rapidly close the gap in hourly wages. Capture management executives are executive-level employees with the same salary requirements.
Ultimately, consultants cost less than full-time employees in most cases.