Unfortunately, many small biz owners have never learned the differences between price and value and most often you get what you pay for. Or I have met some small biz owners that feel their job is to negotiate every last penny of profit out of a deal and then complain because the vendor does not provide the very highest quality of service. What could they possibly be thinking? [Maybe this would be a good topic to blog about!]

The advice I give my small biz clients in these economic times is to search out ways to invest less time in activities that are not their core business and invest this time into marketing their products/services. They cannot “save” their way to success by focusing on cutting expenses but must “sell” their way to success by focusing on marketing and sales.

As a serial entrepreneur myself, I believe “time” and what you do with it, is far more important than “cost”. As a good small biz owner they should already be running a tight ship and there shouldn’t be too many areas to cut expenses. Shame on them if there is.

I am no expert on HR consultants compared to PEOs. However, if you were pitching me, my concern would be more focused on how much time you are saving me that I could reinvest on marketing my core business. I have had experience with one PEO and they served me very well. I was able to grow a six person company with revenues of about $500k to 150 employees with revenues of $15 million by focusing on marketing rather than payroll, benefits, regulations, recruiting, training, 401k, writing employee manuals and the many other things my PEO handled for me.

I do recognize that all PEOs are not created equally. Some are not much more than a payroll service while others are full service. I would guess that also holds true for HR consultants. But I strongly believe that small biz is better off focusing on their core business activities and generally can improve the quality of their non-core activities by contracting out to a vendor where it is their core business activity. I will leave it to each small biz owner to decide whether that is best accomplished with a PEO or an HR consultant.

Thanks for your input Margaret!

One of the services we provide is personal support for our clients. We offer individualized products, we know their businesses intimately, we build trust in the relationship.

As you pointed out, PEOs are not for everyone. There is no one-size-fits-all solution, so business owners should research other alternatives. A competent, experienced HR Consultant can provide much of the support required in the “ramp up” phase or the “mature” phase of a business.

I invite your readers to check out our services: http://www.mjms.net – we are your HR Department On Call(tm) and also provide HR Help Desk ™ services.

Thanks for starting this discussion – it is a great service you are providing.

Margaret Jacoby, SPHR
MJ Management Solutions
http://www.mjms.net

As a serial entrepreneur and experienced CEO, there are a few things that I know very well:

1. Anyone can create a lower quality product and sell it for less.

2. A company that bases its strategy on be a low cost provider has their margins squeezed in the best of times. In tough times, the only place to turn is to cut out certain service or do a very poor job of providing them.

Based upon my personal experience with PEOs, although important, cost is not the most important consideration in using PEOs. You have to get out of the weeds and look at things from a higher position.

Using a high quality PEO, freed me from being bogged down with HR, payroll, legal, liability and other issues that had little to do with my core business and allowed me to focus on marketing to increase revenue. The end result was that the increase in revenue as a result, was many times greater than the cost of the quality PEO.

Today, just like in past recessions, small business owners often focus on cutting expenses rather than increasing revenue. I just don’t believe you can “save” yourself to success. Yet, when totally focused on increasing revenue, they have been able to make dramatic turnarounds. (See Top Turnaround Tip For This Economy: http://bit.ly/j9GCA.)

In my research for this article, I learned that the small PEOs with a low price strategy are struggling financially. They have no margin as a result quality does suffer. Considering how important this part of a small business is to morale and the overall well being of a business, it is my opinion that this is not the place to haggle over price. PEOs can help you dramatically increase your revenue if you use the newly found time and focus on marketing and customer service. A poor PEO can be a horrible distraction.

So my final word is listen to the sales pitch and see where the PEO has put their emphasis (quality or price – it is impossible to have both), check reference from other companies your size that have been with the PEO for a while and you will be able tell with which one you can trust the process.

However, just because there are some PEOs that provide poor service, don’t be tempted to “throw the baby out with the bath water.” A quality PEO can help you succeed far better than trying to do it yourself.

Just one man’s opinion, but one I respect. :-)

Great article about PEOs from the 35,000 foot level. When you get down into it, there are a number of differences around the PEOs and how we service and price our service. TriNet has transparent pricing and the best HRIS employee-driven tool in the business.

The folks from Administaff may be Old School and may have “founded” the PEO industry. We here at TriNet are the New School and we are working on advancing and perfecting the industry.

Give us a look too.