You Can Improve Your Business Results By Outsourcing
The advantages of outsourcing can be significant for small business owners and for the business. Reviewing the history of outsourcing as a business strategy demonstrates that the need for specialized and low cost labor was a key driver. Small businesses are often constrained by the need to keep costs down and to find competent labor. Many small business owners cannot afford, and do not need, a large number of employees. Yet, small businesses need to grow to survive.
How to manage your small business for business growth without increasing your employees? How to keep focused on your defined business scope and manage the day-to-day business activities? Outsource needs that you can’t meet from within the business.
Outsourcing is about hiring outside resources or specialists to do what you can’t, or don’t want to, do yourself. You might not have the skills, experience or education to do everything that needs to get done. Or you might need more help than your existing staff can provide. For example, you might want to do a telemarketing blitz for the introduction of your new product. You don’t have the internal resources to do it efficiently, so you hire a call center in Las Vegas to do the calling. Or you might be able to do the business accounting yourself but you don’t have time in your day, so you outsource the bookkeeping.
Some of the advantages of outsourcing include containing payroll costs, minimizing your recruiting efforts, having fewer internal employees to managing, and improved utilization of dollars (you can hire specialists in the field on short term contracts). Often the most significant advantage is in the cost/benefit relationship. Contracting for a specific service or project is often the most cost effective solution.
There are many functional services that can be outsourced. Here is a short list of some of the most common ones: human resources support – including recruiting, training, salary surveys, writing of job descriptions, writing of employee policies, payroll and benefits; accounting support – such as accounts receivable, accounts payable, bookkeeping, financial statements; marketing – such as specific direct marketing programs, new product launches, promotional brochures, and email campaigns; information technology support – such as vacation relief, backing up remotely, hardware maintenance, and software analysis; transportation – such as warehousing, inventory, shipping; building and grounds cleaning and maintenance; sales – such as independent sales agents or distributors; management consultants; and more.
Transition from outsourcing services to hiring a full time person when the cost of outsourcing is significantly more than the cost of hiring staff; but make sure that you recognize that outsourced services are often specialized whereas an employee may be more of a generalist. For example, if your accounting outsourcing is costing you 20 percent more than an employee would, hire an employee who can do the accounting (receivables, payables, costing, and financials) and help in the administration of the office.
There are many good reasons to outsource but the best reason is that it allows you to focus on what you do best, and to focus on what’s harder to outsource (your passion for the business). Consider your strengths and weaknesses and focus your efforts on the higher impact and higher profit endeavor. Your decision to outsource needs to be balanced with what you gain or lose by outsourcing.
As a small business owner or manager, you are focused on getting, and improving, your success. The advantages of outsourcing are significant: save money and time and improve results. And use more proven strategies and resources from the More For Small Business site to better lead your business.
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