To start and run your business successfully, you need the right people possessing the right skills.
For some businesses, it makes sense to outsource some business functions, particularly in the startup phase. This article examines how to evaluate the pros and cons of outsourcing, where to look for outside professionals who can help your business, and how to make outsourcing work for your situation.
Understanding Outsourcing
Today’s business owners have a lot of choices, and one is whether to hire in-house or outsource the expertise you need. Many startups lack the small business funding necessary to scale up quickly by hiring the teams needed to grow. Instead, some small business owners end up trying to do everything they need themselves. This can lead to business failure and burnout when you don’t have the expertise or the energy to do it all yourself.
Instead, consider outsourcing critical resources to build your business. Outsourcing isn’t just for big businesses; today’s outsourced resources are more accessible than ever before. Outsourcing tools, services, and even labor can have a strongly favorable impact on your organizational growth and bottom line.
The Internet has been the great equalizer in this respect. Professionals can provide their services from anywhere in the world and anyone can use software tools formerly only available to organizations with hefty cash flows. The chances are high that you’re already outsourcing some business-related tasks like payroll, recruiting, or background checks for employment.
What are the other types of outsourced resources available today?
- Highly credentialed consultants that can serve in executive-level roles such as a CIO or CFO
- Software and human resources to handle daily mundane tasks such as transcription, data inventory, billing, or accounting
- Specialized expertise, such as a cybersecurity team, website designers, content, or social media marketers, and more
- Staffing services that can provide temporary, contract, or temp-to-hire workers when you need them
- On-the-ground resources such as cleaning companies to keep your office neat or landscaping crews to take care of your curb appeal
With so many outsourced services available today, what are some of the most common functions that a small business outsources?
Top Five Services to Outsource
Entrepreneur names five types of services that it makes sense to outsource:
- Content marketing gives companies a good bang for their buck. Publishing frequent content from social media to blog posts, videos, and eBooks can all help your company sell more. It can build your brand, improve your Google rankings, and attract clients, but it is a process that many entrepreneurs may not have the time or talent to do.
- Bookkeeping is another skill that probably doesn’t take massive amounts of time each week, but if you don’t have the skills or time to take it on, it’s better to outsource this service to an expert. Guessing on the books leads to tax problems, cash-on-hand challenges, and other financial issues that no one wants to experience.
- Payroll is mired in regulatory complexities. Firms like ADP specialize in providing a solid outsourced payroll service that handles tricky issues like municipal taxes and insurance payroll deductions. If you don’t have the expertise to do it yourself, it’s better to outsource.
- Lead conversion from online marketing campaigns involves knowing how to generate leads and convert them into sales. It’s is a time-consuming process that most small business owners simply can’t manage alone.
- Administrative tasks and scheduling are a tedious, time-consuming process that can easily be farmed out to a virtual assistant. That way, you’re only paying for the time they spend on these tasks instead of having a full-time office worker that you probably don’t need…at least in the early stages of your business growth.
Deciding what tasks to outsource is a complex undertaking because there are just so many choices. However, just because you can outsource, doesn’t always mean that you should. It’s a good idea to keep core business functions in-house, but tangential functions such as IT or payroll are usually good choices for outsourcing.
Pros and Cons of Outsourcing
Pro: The biggest plus of outsourcing is that freelancers and subcontractors can join your business, apply their expertise, and then leave. The cost savings over hiring full- or part-time workers is substantial. Small companies can outsource staff and avoid the overhead of payroll taxes, health insurance, and worker’s compensation. It’s an economy of scale from which most startups can benefit. Cutting capital costs is a good way to free up cash flow. Then, if you need it, you’ll be in a good position to seek out small business funding.
Pro: Outsourcing can improve your business efficiency. If you’re a start-up, it can free you and your workers from having to wear multiple hats, which is so typical with small businesses. Instead, freeing up your core workers to focus on critical business functions while farming out extraneous but important tasks will give you an edge over the competition.
Pro: Outsourcing can reduce your risk. It’s easy to make mistakes in your small business as you’re getting started. Since markets are so competitive today, should you really risk wasting that kind of time? Outsourcing ensures that the tasks necessary to grow your business will be accomplished well right out of the gate because there is no learning curve. Hiring an expert lessens the risk that a critical mistake will be made which will slow you down and potentially cost you money.
Con: On the other hand, it can be time-consuming to find the right professional service. There are third-party vendors, freelancers, and online services from which to choose. Knowing the right time to outsource and which resources to choose are just two issues. You also need to communicate to the vendor what they need to know to do the job well.
How to Build a Team of Outsourced Professionals
Finding the right team of outsourced professionals can help you launch new projects and scale growth as you focus on your core business plan. However, you must choose your new partners carefully or run the risk of wasting time and money on a third-party vendor that fails to deliver.
If you’re looking for a small business funding partner, look no further than Benetrends. We have an excellent track record of helping companies like yours with 401(k) and other types of small business funding. Plus, we have established partnerships with service providers that handle Payroll/HR, Legal Services, Insurance and more. To get started, schedule a consultation with our lending experts today.