Do you hire contractors as personal trainers, dietitians, or wellness coaches? They’re the face of your business to your clients — and treating them like hired hands means missed business opportunities.
Here’s what you can do to make the most of these critically important relationships:
1) Put your expectations of each other in writing.
Smart business managers use written agreements with independent contractors. Work closely with your attorney or tax advisors, because the tax classification of independent contractors is a complex area.
Putting your agreement in writing is valuable because it:
- helps establish the nature of the relationship for tax and legal reasons
- spells out your expectations of confidentiality
- helps you recognize and resolve ambiguities or contradictions in what you expect from each other
- clarifies mutual expectations regarding scope of work, turnaround times, etc.
You want to spend your time growing your business, not arguing over half-remembered discussions you had with someone months ago.
For example, do you want a timesheet every week even if you pay monthly? Do you want a client report after every wellness coaching session? What are your contractors’ payment and scheduling expectations?
2) Treat independent contractors like strategic partners, not hired hands.
Treating key contractors like hired hands – show up, do the work, go home – results in missed business opportunities.
Giving them the full context helps them do their very best for your business.
Now, we’ve talked to managers who believe that sharing information about your business direction with contractors will compromise their IRS classification as a contractor.
But remember that we’re talking about the same kind of information you’d routinely share with any key vendor. That’s how you should view your key contractor relationships as well. Just make sure you’ve got a confidentiality clause in your written agreement, and periodically remind them about it.
The worst thing you can do is to leave your key contractors in a vacuum. For example, many health and wellness businesses hire personal trainers and dietitians as independent contractors. For many of your customers, these contractors represent the face of your business. It’s to your advantage to keep them up-to-date on special offers, expansion plans, new products and services, and anything else that might be relevant as they work with clients.
For example, if you’re planning to shift the focus of your wellness center to rehab, it makes sense to share that direction with your personal trainers – even if they’re contractors. Let them know how you plan to grow the business and the skills they’ll need to continue to work successfully with you.
And the added context helps them make recommendations to you about how to improve your business. For example, the dietitian who knows that you want to add more nutritional services may have some great ideas about programs she thinks would work for you.
3) Consider results-based pay.
Another popular misconception: that contractor compensation based on performance jeopardizes the tax classification of the contractor.
It’s ideal if your contractors do well financially when they perform excellent work and your business profits as a result. Many wellness businesses use contractors in key roles – so it’s critically important that they’re motivated to excel at behaviors that will help your business do well.
Let’s revisit our personal training example. It can devastate your clientele if a popular trainer leaves and takes a dozen clients with her. Make it worth her while to stay with you by rewarding her for excellent results.
Your tax advisor can help you structure pay arrangements that protect your contractor’s tax status while rewarding them for helping your business succeed. For example, consider quality-based bonuses for specified levels of client satisfaction as measured by a feedback survey. Or one-time payments for early achievement of project milestones spelled out in your agreement.
4) Don’t let “out of sight” mean “out of mind.”
When contractors aren’t physically located at your facility – for example, telephonic wellness coaches – it’s especially important to stay in touch. The same rule applies if they typically drop in to, say, lead a class or client session, then zip off to their next commitment.
It’s expensive and time-consuming to replace and train a contractor who’s experienced in working with your business. One of the best ways to strengthen the relationship is to treat them like an important part of your company. If you’re not seeing them face to face, you need to stay close to them by telephone or e-mail.
Get and give specific feedback – early and often – on what’s working and what’s not. Get their input on how you can better support their efforts. And again, remember to keep them in touch with what’s going on in the business.
Communicate, communicate, communicate!
5) Build loyalty by helping their businesses succeed.
Many contractors are constantly scrambling to maintain a reasonable income and find new clients. They often work only part-time for your business. That means that if the grass looks greener elsewhere – financially or otherwise – they’re going to jump ship.
Certainly, paying a competitive rate is one piece of the picture. But loyalty to your business is built on more than just money. Everything we’ve already recommended will help strengthen your relationship with your key contractors.
However, there’s one more thing you can do. Help their businesses succeed. For example, if you can’t use a health educator full-time, give her referrals to other potential new business. You’ll reduce the likelihood that she eventually has to look for a conventional job. You help reduce the time she has to spend marketing herself. And you’re strengthening the loyalty she feels to you and your business. When she does eventually move on, she’ll be far likelier to work with you on a graceful transition.
The bottom line: Work closely with your attorney, accountant, or tax advisor and you’ll find that it’s possible to elevate your key contractors into key assets for your business.