Guest blog: No business is an island

Julie Bhusal Sharma

By J.R. McCullough

It's no surprise that starting or expanding a company can cause angst. Even the most talented business owners quickly realize that with growth comes a myriad of potential headaches. Is the business expanding too fast? Am I hiring the right people? Can I keep up with payroll? Do we offer competitive benefits? Is the company compliant with government regulations?

Perhaps the most vexing question of all is: How do I deal with these issues while remaining focused on my strategic vision for the company?

According to the US Department of Labor (DOL), only about half of all businesses founded in a given year are still in existence five years later. In addition, the DOL statistics show that around the 10-year mark the number of survivors drops to about one-third of the original figure.

Why do so many businesses fail even while growing? Oftentimes the business owner may become overwhelmed and doesn't have the necessary skills or knowledge to manage the many facets of a growing entity. However, assistance from an outside consultant or human resources provider can help relieve the business owner of burdensome and time-consuming responsibilities that detract from the main pursuit.

Some of the most common areas that companies encounter with difficulty during a growth phase include:

Careless hiring. The impulse to hire quickly when the need for additional staff is pressing is understandable. However, ignoring proper hiring practices can create problems. Business owners should interview serious job candidates several times, and have a senior staff member speak with the candidate independently. Resumé details should be verified, and references thoroughly checked. Poor hiring decisions can be an impediment to efficient growth and detract an entrepreneur from his or her most important tasks.

Using independent contractors. A growing company may fill some functions with workers it classifies as independent contractors, rather than employees, as a way of saving on payroll taxes and employee benefits. Owners must take into account the complex rules defining when a worker can legally be classified as an independent contractor. Federal and state agencies can impose devastating financial penalties on businesses that misclassify employees.

Government compliance. The alphabet soup of federal rules and regulations that impact businesses – OSHA, HIPAA, COBRA, ADEA to name a few – can overwhelm even the most conscientious business owner. Similarly, employer liability management can be complicated. Rules on difficult issues such as workers' compensation, terminations and even drug testing are increasingly complex, and missteps can result in costly repercussions.

Downplaying cash reserves. Growing a business is expensive, of course. But committing all excess cash to growth can be a fatal mistake. Without careful planning, a growing business may find itself without the resources to weather unforeseen adverse circumstances, such as a market downturn, operational difficulties or failure to meet the growth target. A well-run company can survive all of these occurrences, provided that it has the resources to stay in business.

These are just a few of the issues that can throw a young firm off the growth track. Business owners should seek professional assistance in confronting them to help keep their vision focused on their main goals.

J.R. McCullough is a district manager in the Columbus office of Insperity, a national provider of human resources and business performance solutions; (800) 465-3800.