Written by Jim Thomas, Business Development Professional at Tilson HR
Ok, I may be a little biased here… but after nearly 25 years working in payroll, HR, and benefits, I’ve noticed something: most small and mid-sized businesses (SMBs) have everything they need to compete—the right team, the right mindset, and a great business. But when they’re up against larger companies sitting in the Pole Position because of their depth of resources and built-in advantages, it’s like running in the Indy 500 with a well-built car… just missing a little extra horsepower.
When I started selling payroll services to SMBs in May 2000, things looked very different. For starters, LinkedIn didn’t even exist yet—it wouldn’t launch until 2003. Juan Pablo Montoya had just won the Indy 500. Payroll was transitioning from green-screen and DOS-based systems to more powerful Windows PC-based platforms. But even then, I could see that larger companies had a head start—not just in technology but in the other assets they could leverage to perform at a higher level.
As the industry moved to the cloud and my career evolved, I had the opportunity to work with larger, more complex organizations, giving me an even deeper understanding and closer view of the gaps. I also made a two-year pit stop as an employee benefits broker, where I saw firsthand how small businesses struggled to keep up with rising healthcare costs, compliance challenges, and HR administration. It became clear that larger companies weren’t just winning on benefits—they had an entire operational and strategic advantage that SMBs couldn’t easily replicate.
The SMB Challenge: More Than Just Benefits
Running an SMB is a constant balancing act. You’re expected to compete with larger companies, but without their deep talent bench, built-in compliance resources, or administrative infrastructure. While big companies have internal teams dedicated to HR, payroll, benefits, talent development, and compliance, SMBs are often left piecing together solutions, managing vendors, and trying to keep up with constantly changing regulations.
Beyond just the challenge of competing with larger companies, entrepreneurs are navigating an economic reality where the cost of money keeps rising—borrowing isn’t as cheap as it once was, and every operational dollar needs to stretch further. Managing risk, payroll, and compliance while trying to reinvest in the business can feel like a no-win scenario.
And let’s be honest—people know what they know. Most SMB decision-makers didn’t strategically design their back-office systems; they evolved over time. As they brought in different partners for benefits, payroll, and risk management, they patched the gaps themselves with spreadsheets and manual workarounds—draining several of their most valuable assets: time and focus.
But now, disrupting this patchwork may feel like making an unnecessary pit stop—burning time and resources when they’d rather stay focused on the race ahead.
Why This Matters Beyond Operations: The Community Factor
Throughout my career, I’ve noticed something interesting. Most people I know prefer to work for smaller businesses, me included—they like the personal connections, the sense of being seen and heard, and the opportunity to make a real impact. But many of those same people end up working for larger companies, not necessarily by choice, but because those companies offer better compensation, stronger benefits, and more structured career growth.
For SMBs, this presents a challenge: How do you attract and keep great people while maintaining the close-knit culture that makes your business unique?
It’s no surprise that we’re seeing a surge in fractional services in our communities—Managed IT, CFO, COO, CHRO, CSO, etc.—rallying together to support businesses where they need it most, a development I see as a silver lining in today’s challenging business landscape. SMBs are realizing they don’t need to build everything in-house to stay competitive; instead, they can leverage specialized expertise at the right time, without adding unnecessary overhead. A PEO works alongside these strategic partners, providing additional support where it’s needed most. Competing for and keeping the best people-for the mission.
Change Management: Why Most SMB Transitions Fail & How a PEO Prevents It
Change is hard, especially for SMBs. Too many of their change efforts fail—not because they aren’t committed to growth, but because they sometimes lack the internal horsepower, time, and expertise to implement and sustain.
A Professional Employer Organization (PEO) virtually eliminates this problem. Our infrastructure is built to absorb SMBs into a unified system, making transitions efficient and more manageable.
- Minimal disruption to daily operations—implementation happens mostly behind the scenes with support to help keep the transition on track and accurate.
- Fewer compliance headaches and less systems and vendor bumps in the road—everything is integrated into one streamlined approach. Serviced by a team of dedicated payroll and HR administrative and advisory professionals.
- Take the guesswork out of benefits—gain access to better cost-efficient pooled plan options that are flexible for your workforce and fully managed for smoother adoption and long-term success.
Most importantly, businesses keep full direction and control. A PEO doesn’t take over the wheel—it removes friction so SMB owners and leaders can focus on what they do best and the road ahead.
The Bottom Line: Winning Where It Matters—And Why There’s Cause for Optimism
The good news? The rise of strategic partnerships, fractional services, and alternative solutions like PEOs means SMB entrepreneurs are finding new ways to win—leveraging interconnected support systems to compete and navigate financial challenges more effectively. Rather than going at it alone, SMBs can now tap into the right expertise at the right time—keeping their focus on growth instead of spinning their wheels in back-office complexity. Fractional services help business leaders gain traction by providing specialized expertise, ensuring their teams have the right support to stay competitive without unnecessary inefficiencies. Success isn’t always about a complete overhaul—it’s about making the right adjustments along the way.
I’m grateful to be part of Team Tilson and for the business leaders and partners who have trusted us to help navigate their journey. Along the way, I’ve seen firsthand what it takes to build a thriving business—resilience, adaptability, and the right support. If you’re looking for a partner to help move your business forward, let’s connect.
