How PEO Can Help Your Business Grow 

April 14, 2025

It’s no secret that small and medium-sized businesses (SMBs) face an uphill battle when it comes to growth. Common challenges include– 

  • Time and resource constraints
  • Lack of employee morale 
  • Issues in cash flow management
  • Compliance concerns 
  • Increases in recruitment demands …and more

What if we told you that you didn’t have to face these challenges alone? Drumroll please– enter the Professional Employer Organisation (PEO), your behind-the-scenes partner in growth. 

Before exploring the benefits of partnering with a PEO, let’s set the stage with some statistics that reveal the transformative effects PEOs have had on a multitude of businesses. According to the National Association of Professional Employer Organizations (NAPEO)– 

  • Companies that use PEOs grow 7-9% faster than those that do not. 
  • PEO clients have a 10-14% lower employee turnover rate. 
  • Businesses that partner with a PEO are 50% less likely to go out of business. 
  • Over 208,000 companies in the United States use PEOs, employing approximately 4.5 million individuals. 
  • PEOs currently represent 17% of all businesses with 10-99 employees. 
  • For every $1000 spent on PEO services, a client saves $1272, for a return on investment (ROI) of 27.2%. 
  • Most organizations add retirement plans, health benefits, and life insurance when they begin working with a PEO. 
  • Since early 2020, PEO clients have seen employment growth of 1% while comparable companies have since seen a 6% decline. 
  • The rate of employment growth for PEO clients over the past six months was 81% higher than for businesses that don’t use PEOs. 

It’s clear that PEOs have consistently delivered significant growth benefits to SMBs. But before we delve into how a PEO can drive growth for your business, let’s unpack what a PEO does and the types of businesses that stand to gain most from this partnership. 

With the fundamentals in mind, you’ll see why PEOs can be a powerful partner in propelling your business forward. 

What is a PEO? 

A PEO is a third-party company that partners with SMBs to provide full-service human resource (HR) services. Within most PEO arrangements, the PEO becomes the co-employer of the client company’s employees. The PEO then shares employer liability with the SMB. 

Here’s how it works– the PEO and the client company enter into a contract. This contract is known as a client service agreement (CSA) and it outlines the specific services the PEO will provide. While the client company retains control over its day-to-day operations, PEOs offer several other notable benefits. 

Why Use a PEO? 

With a PEO by your side you can focus on what matters most to you– your business. With the guidance of PEO, you’ll gain peace of mind on several aspects of your business. 

  • First, PEOs handle the nitty gritty, time-consuming HR tasks. Tasks like payroll preparation and processing, benefits administration, and specific employment-related paperwork can be outsourced to a PEO. Depending on the taxing entity, the PEO may have liability for filing local, state, and federal employment taxes. 
  • Second, through a PEO, your employees will gain access to a range of benefit options. The best part? These benefits are often available at better rates. This means you’ll be able to better attract and retain top talent. 
  • Third, a PEO can help your business mitigate and/or manage potential liabilities. A PEO always stays on top of employment laws. They handle everything from compensation claims, I–9 requirements, EEO reporting, and more. By partnering with a PEO you safeguard your business from potential penalties. 
  • Fourth, a PEO reduces your overall business costs. PEOs are known to have access to Fortune 500-level benefits at affordable rates. Likewise, they reduce costs through improvement of hiring practices, which in turn reduces turnover rates. 
  • Fifth, a PEO can help your business attract investors. Partnering with a PEO reveals to investors that your business has its HR affairs in order. 

What Kind of Businesses Benefit from a PEO? 

As mentioned prior, SMBs stand to benefit the most from PEO partnerships. PEOs are good for most businesses within a multitude of industries. This includes but is not limited to– 

  • Nonprofits 
  • Insurance providers 
  • Healthcare services
  • Legal services
  • Management services 
  • Consulting services
  • Engineering services
  • Security services
  • Heating, ventilation, and air conditioning (HVAC) services 
  • Accounting services 
  • Technology providers 
  • Real estate services… and more 

What’s Out of Scope for a PEO? 

While it might seem that PEOs provide a range of services, it’s important to remember that there are a few things they do not do. A PEO is not a replacement for your business’s owner or manager. Hence– 

  • A PEO will not make independent decisions regarding your business. A PEO will provide suggestions but ultimately all final business decisions are up to you. 
  • A PEO will not help with aspects outside its stipulated job scope such as sales, advertising, and marketing. It is crucial for you as a business owner to still take into consideration things that are not covered by a PEO
  • A PEO will not dictate pay rates, working hours and schedules. A PEO will facilitate the process for you but these decisions will remain entirely under your control as an employer. 

5 Ways a PEO Helps Your Business Grow 

HR is one of the most crucial aspects of your business. Whether you like it or not, it’s a requirement. However, within SMBs, sometimes business owners are stretched thin. This is where a PEO comes in. Here are five ways a PEO helps your business grow– 

  • Partnering with PEO frees up your time. This means your main focus can be on revenue-generating activities. Statistics show that business owners dedicate up to 20% of their workdays on HR tasks. With a PEO by your side, you prioritize networking opportunities and manage core aspects of your business while a PEO handles all the necessary HR tasks. 
  • A PEO gives your employees access to better benefits. This includes– 
  • Medical and dental coverage 
  • Retirement plans
  • Life insurance policies 
  • Disability insurance 
  • Commuter benefits 
  • Educational assistance 
  • Adoption assistance… and more  

Access to these benefits can be a major point of difference for potential employees. Partnering with a PEO means you can make yourself more attractive to top talent. 

  • By partnering with a PEO, you can significantly facilitate your expansion into new markets. Part of a PEO’s task is to navigate local laws and regulations, thus ensuring compliance when deciding to hire and onboard employees nationwide or even internationally. A PEO is well-versed in the constantly evolving nature of the employment landscape, providing you counsel throughout your expansion trajectory. 
  • Over time, a PEO can help you craft a suitable and strategic HR plan that will dictate the future direction of your business. By partnering with a PEO, you’ll share the same HR management decisions that align with your company’s long-term goals and objectives. For instance, a PEO can assist in– 
  • Conducting employee performance appraisals
  • Designing the ideal recruitment process 
  • Staying compliant with employment laws and regulations
  • Streamlining administrative HR tasks 
  • Reducing overall costs by improving hiring practices
  • Creating policies for your business 
  • Conducting ongoing training for both management and employees
  • Developing a handbook for on-site and off-site employees 
  • Creating and managing employee benefits packages… and more

With expertise in a range of areas, a PEO provides businesses with the support needed to develop both short-term and long-term HR plans. Over time, this streamlines HR administration processes. This then allows your business to focus on growth initiatives rather than spend time being bogged down by HR tasks. 

  • Last but not least, a PEO can help your business stay compliant with laws and regulations that govern the industry in which you operate. A PEO is invested in helping you align your operations with the law, ensuring that you’re able to navigate the legal landscape in whatever territory you decide to venture. One of the many things a PEO does to help you reduce your legal liability is provide workers’ compensation insurance coverage. 

For instance, to mitigate the possibility of injuries, a PEO offers loss prevention specialists to review safety practices and help employers design return-to-work programs. 

How ProSource Solutions Can Help Your Business Grow 

Ready to see your business reach new heights? Keen on partnering with a PEO? At ProSourceSolutions, we offer a range of PEO services that are suited to address and alleviate the challenges faced by businesses like yours. Our services include but are not limited to– 

As your preferred co-employer, we take care of all HR related matters while you focus on the business of your business.. At ProSourceSolutions, we guide you towards becoming an ‘Employer of Choice’. Scale your business with us, one step at a time. 

Posted in PEO