Internal vs External Team Members How Getting This Right Protects Your Profit Margins (Day 2048)

Day 2048. I am 20,480km into a 40,075km run around the world, completed one barefoot-style kilometre at a time, every single day, without exception. There are 19,595km left to cover. And while I run, I think. That is one of the things daily running does for me it creates space to process ideas that matter, ideas I can bring back and share in a way that might genuinely help someone.

Today I want to talk about something that sounds straightforward but causes a significant number of business owners real problems when they get it wrong. The difference between internal and external team members, and how structuring your approach to both can make or break your profit margins.

Let me start with the obvious truth that most people overlook. Labour is almost always the biggest overhead in a business that has reached any meaningful size. Whether that labour sits in your operating expenses as an indirect cost, or whether it lives in your cost of goods sold as a direct production cost, it is a significant line on your P&L. And if you do not manage it deliberately, it will manage you.

Internal team members are the people who form the core of your operation. They typically receive a salary or retainer. They show up consistently. They understand your culture, your systems, your standards. There is real value in that. I have seen what happens when a business tries to function purely on commission-only structures to save money the staff turnover becomes relentless, the instability becomes a distraction, and the cost of constant recruitment quietly eats whatever you thought you were saving. In my experience, a hybrid model works best. A reasonable base salary with performance-related incentives on top. It gives the team member enough security to commit fully, and it gives the business a mechanism to reward output without the fixed cost spiralling.

But here is the part that a lot of business owners miss, or resist, because they equate loyalty with headcount. You do not need to employ everyone to run an effective operation.

External team members contractors, specialists, consultants brought in on an ad hoc basis allow you to convert what would otherwise be a fixed cost into a variable one. And that distinction matters enormously. When your workload increases, you bring them in. When it quietens, you do not carry that cost. You are not paying for capacity you are not using. In property, for example, rather than employing a full-time maintenance manager, you build relationships with trusted contractors who you call when something needs doing. Rather than carrying an internal lettings function, you use a letting agent when it serves the business. The cost hits the P&L only when it is directly connected to activity or income.

Now, I want to be honest about the trade-offs, because there are some. External contractors are not as embedded in your culture. They may have competing workloads. Their loyalty is naturally limited they are running their own businesses, after all. You have less direct control over their priorities. These are real considerations, not things to dismiss. Which is why the model I use and advocate is not a choice between internal and external it is a deliberate combination of both.

Keep a lean, well-structured internal team in the integral roles. Roles that are systems and process-driven, so that the business functions around documented processes rather than individuals. That way, if someone leaves, the role continues. The systems hold. And then, around that stable core, you use external contractors to flex capacity when the business needs it when sales increase, when a project demands specialist input, when a particular period creates a temporary spike in workload.

When that elevated workload becomes the new consistent baseline, you consider bringing another person in internally. That is the trigger. Sustained, consistent demand not temporary spikes.

Getting this right genuinely protects your profit margins. It is not a complex concept, but it requires discipline and clarity. You need to know which roles are integral to the daily operation of the business and which are intermittent. You need to resist the temptation to over-hire in good periods, and you need to resist the temptation to under-resource in growth phases because you are nervous about fixed costs.

I think about this alongside what I am doing with this run mission. For 2,048 consecutive days I have laced up my Vibram FiveFingers and gone out regardless of the conditions, the schedule, the weather, or how I feel. The mission has a fixed commitment at its core daily distance, every single day and everything else around it flexes to make that possible. The content, the collaborations, the reach-building, all of it works around that non-negotiable daily output. In a sense, that is the same principle. Know your core. Protect it. Build everything else to flex around it.

This daily streak is part of a bigger mission. The run vlog, which you are either reading or watching right now, is my attempt to run the equivalent of one lap of the earth 40,075km and raise £1M for children's causes including Great Ormond Street Hospital and BBC Children in Need. 20,480km covered. 19,595km remaining. The more people this content reaches, the more we raise, and the more children's lives we have a chance to impact. That is why I do this every day. That is why I talk about business, about systems, about the things I genuinely know, because useful content travels further than noise.

If today's reflection on internal and external team members has given you something to think about, I am glad. Drop a comment or a question. If anything here is directly relevant to where your business is right now, I will respond.

And if you believe in the mission subscribe, share, and help more people find this.