- To reduce and control operating costs
- To improve company focus
- To obtain resources they lack
- To free their own resources for other tasks
- To gain access to "world class" capabilities
Source: Outsourcing Institute, 1996.
Fast-growth companies, like companies overall, cited cost savings as the primary reason they began outsourcing: 63% perceived outside providers as more efficient or better able to achieve economies; 43% expected a reduction of overhead or debt; and 33% sought savings on the costs of benefits and administration.
How risky is it to own a business?
- Most business deaths are not failures. They are "voluntary dissolutions," according to Bruce Kirchhoff, of the New Jersey Institute of Technology.
- From the results of an eight-year study of 812,000 small, young companies, Kirchhoff discovered that well over half the businesses survived at least that eight-year period. Only 18% of them closed because of financial difficulties with creditors.
- Of those businesses that disappear, only 20% to 25% end up owing money to their creditors.
Source: Office of Advocacy, U.S. Small Business Administration; Economic Analysis Department, Dun & Bradstreet.
| Failures and Financial Liability, 1991-1996 |
| Year |
Business
terminations |
Total number
of failures |
Average liability
per failure |
| 1992 |
819,000 |
97,069 |
$971,653 |
| 1993 |
801,000 |
86,133 |
$554,438 |
| 1994 |
803,000 |
71,520 |
$410,477 |
| 1995 |
869,000 |
71,128 |
$524,175 |
| 1996 |
823,000 |
71,811 |
$473,759 |
Last year's average liability per failure was about half the size of the hefty debts creditors shouldered in 1992.
Business Failures by Age, 1996
1-5 years42%6-10 years25%10+ years33%Source: Office of Advocacy, U.S. Small BusinessAdministration; Economic Analysis Dept, Dun & Bradstreet.
How fast is pay rising?
- Unemployment was down last year.
- Earnings of both men and women are rising, but women aren't catching up with men.
- Variable pay is rising as a percentage of total compensation.
Source: Bureau of Labor Statistics.
| Employment and Unemployment, 1991-1996 |
| Year |
Number of
civilian workers
(in thousands) |
Number of
unemployed
(in thousands) |
Unemployment rate
(% of labor force) |
| 1991 |
126,346 |
8,628 |
6.8% |
| 1992 |
128,105 |
9,613 |
7.6% |
| 1993 |
129,200 |
8,940 |
6.9% |
| 1994 |
131,056 |
7,996 |
6.1% |
| 1995 |
132,304 |
7,404 |
6.6% |
| 1996 |
133,943 |
7,236 |
5.4% |
Unemployment rates and totals have been falling since 1992, even as the working population continues to grow.
Source: Bureau of Labor Statistics.
| Median Annual Earnings (in current $) |
|
1991 |
1992 |
1993 |
1994 |
1995 |
| Men |
$25,844 |
$26,260 |
$26,728 |
$27,144 |
$27,976 |
| Women |
$19,136 |
$19,812 |
$20,540 |
$20,748 |
$21,112 |
Women's earnings continue to lag behind men's . . .
1996 Earnings for College Graduates with Advanced Degrees: The Top 10%
Men$99,944 or higherWomen$76,544 or higherSource: Bureau of Labor Statistics
. . . no matter how long they stay in school.
Sources: Hewitt Associates; Bureau of Labor Statistics.
| Annual Salary Increases, Variable Compensation, and the Consumer Price Index (CPI), 1991-1996 |
| Year |
Annual salary
increases for salaried,
exempt employees |
Variable compensation
as a percentage
of payroll |
CPI Dec.-Dec.
change |
| 1991 |
5.0% |
3.8% |
3.1% |
| 1992 |
4.6% |
5.7% |
2.9% |
| 1993 |
4.3% |
5.9% |
2.7% |
| 1994 |
4.0% |
6.4% |
2.7% |
| 1995 |
4.0% |
7.6% |
2.5% |
| 1996 |
3.9% |
7.5% |
3.3% |
The future is never assured: sales rise and fall, the economy takes surprising turns, and employees' performance may or may not be consistently reliable. To protect their bottom line and to account for the vagaries of time and tide, many employers have established a variable compensation component (one-time bonuses, performance awards, and so on).
How many home-based businesses are there? What kinds?
