Supercharge Your Growth: The Power of PEOs in Scaling Your Business
Strategy is my jam. If you've ever spent more than 10 minutes with me, I most likely started a conversation about how to scale a business or reduce costs or bring in more revenue. PEO's are my new favorite tool for scaling businesses. PEO = Professional Employer Organization immediate game changers for a growing business. PEOs work with small businesses to help them manage payroll-related taxes, certain human resources functions, access to benefits, and other employer-related administrative functions necessary for running a business.
PEO’s can are a major asset when you have a team between 2-200 when you’re ready to offer health insurance, want to get the best price, and don’t need an HR employee to manage all the details. PEOs offer a wide range of services that can alleviate the burden of HR management for small businesses. By partnering with a PEO, you gain access to a team of HR professionals who can handle tasks such as payroll processing, benefits administration, employee onboarding, and compliance with employment laws and regulations (ADP).
PEO’s will save you a lot of money and time: the average cost of employee turnover is ~$14K (SHRM), a PEO can reduce turnover rates by 12-14% on average (Justworks). That’s a huge reduction! A 2019 white paper by the National Association of Professional Employer Organizations (NAPEO) found that the return on investment (ROI) of using a PEO was 27.2% on cost savings alone.
As a CFO, I love the option of a PEO because it makes onboarding and compliance easier which in turn reduces stress, and allows you more time to run your business. If you remember my prior blog topic: Hiring Smart and Firing Fast then you may remember the cost of stress! Raise your hand if you’ve had a moment of being paralyzed by decisions? With a PEO, your employee benefits and compliance are streamlined so you can stop being paralyzed by trying to manage.
A PEO is specifically a great way for businesses to hire across states - though it’s not a requirement to have a PEO- this can be a massive amount of time and money saved before even getting to the benefit offers.
PEO’s are able to provide this option because they manage hundreds to thousands of employees across multiple companies, which gives them the bargaining power to negotiate competitive rates for employee benefits such as health insurance and retirement plans. This allows small businesses to access comprehensive benefits packages that would otherwise be difficult for them to obtain independently, resulting in lower benefit costs (ADP).
PEOs can help reduce the administrative burden and costs associated with payroll processing and tax compliance. They handle tasks such as calculating and distributing employee wages, managing payroll taxes, and filing necessary paperwork. This enables small businesses to focus on their core operations and strategic initiatives, rather than spending valuable time and resources on complicated payroll processes. By outsourcing these functions to a PEO, businesses can save money on hiring dedicated HR staff or paying for expensive payroll software (ADP).
I have to give a plug to my favorite PEO service: Justworks. Justworks is a super simple to use PEO that offers: Payroll, HR, Benefits, and Compliance. They can get you started with a team as small as 2. According to Justworks, using a PEO saves an average of 37% on employee benefits and reduces HR concerns by 25%.
Benefits tend to be a roadblock for employers, especially those without large amounts of capital. Justworks can take this off your plate and your brain by allowing you to focus on your strengths.
