The average reservation wage, or the average wage a prospective employee will accept for a new job, reached an all-time high of $75,811 in March, according to a new survey from the New York Federal Reserve.
This whooping $2,100 increase indicates a growing trend in the job market where prospective employees are seeking higher wages and better benefits.
This trend is particularly challenging for small businesses that may not have the resources to match these higher salaries. So, how are you supposed to compete? Here's the solution: contracting other businesses instead of hiring new employees.
Contracting other businesses has many benefits for business owners, including reduced costs, increased flexibility, and access to specialized expertise.
Here are some of the key reasons why business owners should consider contracting other businesses instead of hiring new employees:
Reason #1: Reduced Costs
One of the most significant advantages of contracting other businesses is the reduced costs. When hiring new employees, business owners aren't only responsible for paying a competitive salary but also taxes, benefits, and other associated costs. Contracting other businesses completely eliminates many of these costs because you only pay for the services provided by the contracted business. This can help small businesses save money and allocate resources more effectively.
Reason #2: Increased Flexibility
Contracting other businesses also provides greater flexibility for business owners. Think of hiring new employees as committing to a long-term relationship. It can be challenging to adjust as business needs change and takes time and energy. Contracting other businesses allows business owners to access specialized services on an as-needed basis, which provides greater flexibility and agility in responding to changing business requirements without committing to the constraints of hiring new team members.
Reason #3: Access to Specialized Expertise
Contracting other businesses also provides access to specialized expertise that may not be available within the business itself. For example, if you need a website, contracting a web development company can provide access to experienced designers and developers who can deliver a professional website quickly and efficiently. Contracting out this service allows you to focus on your business's core competencies while also getting the expertise of external businesses.
Reason #4: Reduced Risk
Contracting other businesses can also help reduce risk for business owners. This may seem counter intuitive, but, think about it...When hiring new employees, there is always a risk of hiring the wrong person or not finding the right fit for the business. Contracting other businesses allows business owners to work with established businesses that have a track record of delivering high-quality services, reducing the risk of hiring the wrong person or company. AND if you've realized that you've contracted the wrong company, you can just choose another one the next time.
If you find yourself worrying over the the recent increase in the average reservation wage as a challenge for your business, consider turning your operations towards contracting other businesses to complete the services you require. This move can help you reduce costs, increase flexibility, access specialized expertise, and reduce risk. As the job market continues to evolve, it is important for business owners to consider all options available to them and make informed decisions that support their business goals and objectives.
Contact us to learn how we can help you grow the contracting branch of your business -- it's what we do!
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