Should You Hire A Full-Time Employee or Outsource to an Agency?

0:08

[Welcome] to Chase the Vision with Isaac [Mashman]. Hey, what is going on, everybody? Isaac Mashman here, and welcome back to another episode of your favorite podcast, Chase the Vision with Isaac Mashman, the show that is all about helping you become a more capable individual through me sharing my experiences and knowledge in business, life, and personal growth. Today, I want to have a pro and con conversation about hiring an employee versus hiring an agency or a firm to get a specific task done. Now, many of you are business owners, or maybe you're building out your personal brand, and you're like, do I need to bring on somebody to help me with my content?

Do I need somebody to manage my social media? Do I need to outsource this? Do I need to have somebody else come in externally and help me out?

1:07

Well, guess what, guys? You are in luck, because I'm going to be speaking from my own experience and what I have observed as a business owner and as somebody who does have a PR firm. I have independent contractors on my team that have their own agencies, so I want to have this conversation. I want to have this discussion. I want us to be as unbiased as humanly possible as well, being that I do have a firm. So it would be easy for me to say, hey, well, all the benefits are going to be over here, when that would be lying, because there are benefits to having somebody full time.

I want to break those down and have that discussion in today's episode. Before I jump into it, though, I want to remind you of the fee for listening to my show.

1:50

That is to share it with a friend, share it with a family member, share it with somebody that you know personally in life that you know could get value from the things that I'm talking about. I ask that you do that for every single episode. It could be as simple as taking a screenshot of where you're listening and putting it up on Instagram, putting it up on Snapchat, putting it up on Facebook, and saying, hey, go check this out. I would greatly appreciate it. I'm not running advertisements for the show yet. We are still gaining traction, gaining numbers. For the past two months, we have been charting on Apple Podcasts in Gambia.

Crazy to think, but we are consistently in the top 50 for self improvement in, well, Gambia. You've got to start [somewhere]. So it's pretty crazy, because now we are starting to have an impact and influence all the way across the world, literally six, seven, eight thousand miles away in entirely different time zones.

2:48

It's a wild thing. I'm blessed to be able to say that. So anyways, I want to start off with a story. This was a recent client conversation, a recent prospect conversation. It was somebody who I met through a mutual networking event, and we were talking. I set up a discovery call; he reached out to me, and he's like, hey, let's go ahead and hop on a call. I want to learn a little bit more about what you do and then possibly make some introductions and whatnot. I'm like, okay, perfect. I sent him over the link to my discovery call, which has a list of prospective budgets.

He ended up picking a very specific number, and I was like, great, okay, cool. So this is going to be a high ticket client that I'm going to possibly have the opportunity of working with.

3:30

We have our call, the energy is great, and we're having a phenomenal conversation. I'm learning about what he has to do. Then I'm starting to realize that by working with him, I'm going to also have to be training virtual assistants. I'm going to have to be spending a lot of time with this one client because of the caliber of the project. Then I'm like, okay, even though it's a done-with-you service, that doesn't mean that I'm just going to be able to do a call and get in and out. No, I'm going to have to be really staying consistent and being on call for this guy.

I'm going to have to say, hey, let me help your [virtual assistant]. They're going to probably have to put me in a group chat. I'm just starting to really understand that this is going to be a lot of work.

4:14

That's okay. That was perfectly okay with me, but at the same time, I'm like, I need to go ahead and adjust my pricing to meet the standard of what I'm going to be doing. Then I started to include my future value adds, which I'm offering to my larger clients. I'm like, okay, it's time to introduce these. Because whenever you're starting out in business, you're going to have your rates at a specific rate. Then as you have more experience, as you increase your team, as you increase your value, as you increase your level of specialization, it's normal to raise your rate. I'm like, this is the time that I go ahead and present this rate. We went ahead and got off the call, I typed up the proposal, and I sent it over to him.

4:56

A couple of days later, it was on the weekend. I was down in Orlando having a family vacation, so to speak, meeting with family members that I never knew personally. I'm not here to get into that. But regardless, I'm on family vacation, I think I'm at Epcot, and I see that he declined the follow up meeting. I'm like, okay, well, let's see if we need to reschedule. I send him over a voice message, and then he's like, hey, go ahead and check your email. I check it. He's like, the prices are exorbitant. I'm like, what the heck does that mean? So I go into Google: exorbitant. Unreasonably high. I'm like, hmm. It got me thinking, and I'm like, okay, great.

5:37

I'm willing to negotiate with this guy, because even though I'm not one to negotiate prices, the price that I proposed was higher than what I typically charge, because I knew that it was going to be an unusual case of what I needed to do. It would be unusual for me to do work like that and to help other people on the team. But I'm like, you know what, I will rise to that occasion. So I was like, I'm going to be willing to have a conversation about negotiation. But the more I was thinking about it and going through my day, my family trip, I was thinking, and I'm like, you know what?

It's crazy, because the price that I pitched was $60,000 for a year, which boils down to about $5,000 a month, while somebody else who runs a company would pay an entire department of PR professionals 200, 300, 400, 500,000 or even more than that, depending on the size and the scale of the company, to have that PR capability, that PR system. I'm thinking to myself, for the price of $60,000, somebody can have not only me, but they have every other person on my team at Mashman Ventures, all the resources, the access, the one-on-one work, and all of the different things that we provide to our clients.

I'm thinking to myself, if you were running a company and brought on W2 employees, you could bring on three or four different professionals, and you'd be paying multiple six figures versus paying less than six figures at $60,000. That's something that a lot of different companies do.

7:14

A lot of companies will not outsource to somebody else, but they will hire. I think that there are some great benefits to hiring and to bringing people on like that. But you're going to be spending a lot more money, and you're not going to have the same system set up. You're going to have to work hard to get those PR systems set up internally rather than trusting somebody externally on a contract. Now, whenever you bring somebody on your team, and I'm talking W2 employees, depending on the scale of the company, you're going to have to be able to offer health insurance. I believe that the law is that for a company that has 49 or 50 people or over, you're required to offer that. But then you have to take into consideration that you need payroll services.

7:58

For example, if you were a sole proprietor or an LLC owner and you yourself are not on payroll yet, now you have to 100% absolutely start being taxed as an S corp and having a W2 employee. Or even if you don't know what that means, you might not even go and be taxed as an S corp, which means you're going to be paying higher taxes. Then on top of that, you have to take into consideration federal income tax withholdings. You have to withhold Social Security, you have to withhold Medicare, or the Medicaid tax, talking like 7.8%, whatever the actual technical number is. So now you're introducing this complexity.

You're introducing this additional cog into your organization, versus bringing on a firm or an agency, where you don't have to worry about withholdings because it's a tax write off.

8:53

So let's say you're paying $60,000 to a PR firm or to a social media agency. You're not going to be taxed on that $60,000. You're going to submit form 1099 or whatever the form is. And because you paid that money out of your business's bank account, now you're able to write that 60,000 off, and the PR firm has to pay the taxes on that. So if I was to work with this client, he isn't going to be paying taxes on the money that I [made]. Now he's going to have this huge write off on his tax bill, which can actually come at a great time, let's say if it's tax season, which is right around the corner, and he had to pay a bunch of taxes.

9:34

Well, let me lower my tax bill and work with the firm, or work with somebody, so that now I have this [write off]. Then I, as the business owner of the PR firm, have to take the responsibility of paying old Uncle Sam that $60,000. So there is the complexity and the complication of, well, the firm can terminate the contract. There isn't the same company vision. But if you're working with a professional firm, if you're working with somebody that is a professional agency (I'm not talking some dude who's like, let me manage your social media and do a post, and isn't professional; I'm talking working with somebody that has their shit together), you are going to be getting the equivalent of somebody who respects your vision, because that firm, that agency, respects their own individual vision for their company.

10:26

They're going to respect your own, and they're going to want to contribute to your company's vision and the mission and what you're trying to do and what you're trying to solve in the marketplace to the best of their ability, because they know that if they were to work with somebody else, they would expect nothing less. They want to provide the same caliber of service as they would expect to receive. With this particular case, it just sent me down this mental spiral in a bit of a [beneficial] way. It wasn't a negative spiral, because it just had me thinking and reflecting and saying, why is there this cognitive bias, this limiting belief of saying $60,000 to an entire PR firm, or to somebody who can provide X results and help me with my life, is too much, but [I'll be] paying $60,000 to an employee?

11:15

Now, I'm not saying that he is doing that. I'm just saying that in a different situation, I imagine that this bias still exists, where a company would say $60,000 outsourced is too much, but $60,000 to a PR professional is perfect. Let me bring on a second and a third and a fourth person, because one person can only do so much when it comes to PR. Then you bring on multiple people who all have similar skill sets. Or in Mashman Ventures' case, I have an entire media team on the back end of the PR firm. Then I have Eric Chow, and then I have myself, and I have this growing company that has these connections. I don't have to go out and seek connections for you.

11:57

I already have the connections. I already have the knowledge, I already have the value, I already have the resources, and you don't have to worry about creating them. So you have to go through these pros and cons, and you have to measure these out. You have to say, well, should I bring on somebody? Should I bring on an independent contractor, or should I bring on an agency? Because then you could bring on an independent contractor. You don't have to worry about the insurance. You don't have to worry about any of that, but they have a specific job that they are tasked to do. Then you have to build out that company culture internally and hope that that extends to that person who is associated with your company and with your team. It's all about establishing a company culture and continuing to increase your value as you scale.

12:42

If you're staying at the same exact rate... I think about the world offline, our physical reality, where we go to a car maintenance shop or we go to somebody that maybe cuts hair, or we go to somebody that, I don't know, maybe mows lawns. There's only so much that you can do to increase your rate as a service provider in those specific fields. Sure, I guess if you're a barber, you could go and become a celebrity barber. But even then you're going to be limited. I think Floyd Mayweather pays a thousand dollars a haircut, but if Floyd only needs a haircut a couple times a month, you're only making a few thousand dollars, and it's like, what's scalable about that? If you're cutting lawns, you can only make a lawn look so damn good, and you can only charge so much.

13:34

Now it's about quantity. It's not a conversation of quality. It's a conversation of quantity, to be able to increase the amount of money that you're making. Now let's say you're somebody else who, I don't know, is a window washer. You can only wash so many windows and get them streakless and get them looking crystal clear before you can't do anything else to increase the quality. Now it's going to be about quantity and reputation. It's not scalable. With a lot of these internet businesses, we have the benefit. We have the blessing of increasing quality and quantity and our rates, because now we're able to do these different businesses.

We are not in the traditional realm of service providers that our grandparents and our great grandparents and their parents knew. This is a different conversation. It's also funny, because there's this different psychological thing that happens when you're making money online versus making money offline. It's almost like we lose the value of the dollar, and it becomes more of a system of conversation and less of an actual currency.

14:43

When I was down in Orlando, I was actually using cash, and I don't use cash really at all. I use card, and so it's a virtual currency. It's the number that goes up. It's the number that goes down. When you deposit money into the bank, or a check, they click a number and bam, it's there. The bank takes that digital number, and then they're like, okay, let's go invest it. So I'm using cash, which is unusual. I'll usually only keep a $20 bill on me. I was using it, and I'm like, man, I'm giving dollar bills. I'm paying $5 here, I'm paying $10 here, I'm paying $20 here. But at the same time, I'm like, I could easily spend that on Amazon in literally two seconds.

15:28

I'm like, I could literally go and, bam, check, check, buy now, buy now. That value is different. It's a psychological phenomenon that happens where the value is almost nonexistent when it's in our bank account, when it's digital, but we hold onto it more when we're in person. That's the thing. We're playing in this digital realm, in this realm where we're building out companies, we're building out people. Then I want to introduce another subject: how can you merge the digital realm of providing services with the physical? So one of those value adds that I had in my proposal was, I will fly out to you. I will pay out of my pocket to go train you for a full day. I will train your team, and I will provide up to 250 copies of my work, "Personal Branding: A Manifesto on Fame and Influence."

16:20

So as I'm building out this digital empire, I'm also looking for ways that I could expand into the physical space and have that physical connection, because that physical connection is what is going to help you really grow and know somebody. You can put on a front online, but you cannot put on a front in real life, face to face. When somebody sees you going out and having conversations with people, are you being fraudulent or are you being legit? Are you going and doing and practicing the things that you preach, or are you not? So I introduced these different things, and I would recommend that you do the same.

What can you do to take this digital relationship into the physical realm for your clients? Can you provide additional resources that they can print out?

17:05

Can you provide additional incentives, saying, hey, I'll fly out, I'll train you, I'll work with you, I'll show you the systems, I'll do X, Y and Z for you? I know that this is getting a little bit off topic from the original conversation, the pros and cons of hiring an employee versus a firm or an agency. But just know that whenever you do [hire] an employee, you're going to introduce a lot of complexities to it. You're going to be introducing a lot of different things. But if you want to scale and you want to take it to the next level, that's not necessarily a bad thing.

But if it's something that you do not see yourself needing, let's say, a decade from now, or you don't want to necessarily make that commitment, an agency is the way to go.

17:51

The other thing is, when you bring on somebody on the payroll, now they are reliant on you. With an agency, with a PR firm, you have more power and [a lesser degree of commitment], where you can cut the contracts. You could go ahead and cut the negotiation. You could say, hey, I'm parting ways. It's less personal, and it is less personal. Although it shouldn't be, it is less personal. So as you're making these decisions, weigh the pros, weigh the cons, make an educated decision for you, but also realize that you could probably save money by going with an outsourced agency or a PR firm, especially in the case of this client, if he was to pay a couple of people to help him with PR, and professionals.

I'm not talking virtual assistants out of India or the Philippines; I'm talking about somebody who is building a firm stateside. You might be paying a little bit more than you would be paying a couple of virtual assistants, but what is the value that you are receiving from that?

18:53

If you're trying to cut costs, and if you're trying to be cheap, and you're trying to say, hey, I don't want to do this, I want to keep the prices low, it's like, at the same point, you're [biting] yourself in the butt. You're [biting] yourself in the butt. Then if you want to go ahead and build out a company that has people in house internally, you're going to be paying two, three, four, five times the price that a firm or an agency might charge you. Even if I was to double my rate to $120,000, still that's two PR professionals. You don't oftentimes see PR departments with only two people in companies.

Yeah, it depends on the size of the company, but not many companies are hiring full-time people if they only have two or three employees.

19:38

I'm talking about larger scale businesses, people that are making millions a year or hundreds of thousands of dollars per month. That is what I'm talking about. That is the conversation I'm having. If you're not at that point where you can hire full-time employees, consider hiring a full-time firm or full-time agency that you could call, that you could get the assistance from, that you could get the value from. The results might shock you. So guys, thank you for listening to this episode of Chase the Vision with Isaac Mashman. If you got any value from today's episode, make sure to share it with a friend or a family member or a business partner. Until next time, always remember to chase after your vision, and may your coffee be strong. Much love.