For most large companies it is standard to outsource work – hire outside firms to handle work or projects that the company would otherwise handle internally. Considering it is such a standard business practice, why is it that small business owners feel that they have to do everything themselves? Many small business owners would do wise to outsource their distribution, accounting, processing, payroll, and mail services.
Because technology has reached a point where professionals can work anywhere across the globe, more and more small businesses are starting to outsource their tasks as well. The introduction and widespread acceptance of the Internet led to an increased accessibility and availability to extremely qualified professionals. Using outsourcing can lead to savings, mainly because it is not necessary for these outsourced professionals to occupy space at the company. It can also cut down on expenses such as worker’s compensation and health insurance
What can/should you outsource?
It is important to remember that outsourcing a particular aspect of your business has to be considered carefully. You should not outsource something simply because “you do not want to do it,” this is not a cost-effective solution. There are three common areas where outsourcing makes sense; these include payroll duties or accounts, human resources/recruitment, and mail handling and courier / delivery services.
- Payroll or accounts – It makes sense to outsource your payroll or accounts to an outside source, mainly if minute details are not your specialty. Many people compare this to going to the dentist, while few people are looking towards a dental visit, not taking the time to do it right could lead to serious problems later. This frees up time, but may also save you money because you are leaving it in the hands of qualified professionals who understand the small nuances.
- Human resources/recruitment – There are a number of different reasons that it is beneficial to outsource your human resource needs. For starters, it can free up more time to focus on actually running a business rather than having to go through the recruitment process. This means having to place an ad somewhere, going through resumes, setting up interviews, and then finally making a decision. Having someone else narrow down the qualified candidates is worth the money alone. It can also help you minimize employment risk. HR laws are complex, which makes it difficult to remain compliant with ever-changing employment legislation. Having an efficient human resources service will result in soft-cost savings
- Mail handling and courier needs – Unfortunately, not every piece of mail that small business owners receive will be an exciting business proposal; advertising and invitations will be delivered, and there will be plenty of them. However, other times you will need reputable couriers to deliver something quickly. Outsourcing can help eliminate transport costs, floor space, labor costs, and staffing problems. With a quality and reputable mail-outsourcing provider, you should expect outstanding support, high service, and financial benefit. Outsourcing mail service and courier services simply makes sense. It allows business owners to return to core business functions.
Top 10 list of outsourcing benefits
Sometimes it takes a while to identify particular benefits. The same is true for outsourcing for small businesses. These are 10 of the reasons it makes sense to outsource your business in some aspect or another.
- Focus on core activities – When outsourcing, you can focus on what matters to you. Focus on what sets your business apart, what drives you. Use the expertise of others to free up more time.
- Cost and efficiency savings – Certain complicated back-office functions may be necessary, but a small business may not be able to perform them at a reasonable and consistent cost. This is another outsourcing advantage.
- Reduced overhead – The overhead costs for particular functions may be extremely high. For example, if a small business’s growth led to the need for more office space. Many times outsourcing is more cost effective than having getting more office space.
- Operational control – Sometimes departments turn into poorly managed and uncontrolled areas. Imagine having a department that has a budget that exceeds it contribution, does not have enough staff, and too many projects. It makes sense to outsource.
- It can allow for rapid growth – When a company is growing rapidly, so will the back-office operations. While this is great, it also consumes resources that could be invested elsewhere, both financial and human. Outsourcing allows you to focus on important business activities without sacrificing service or quality in the back office.
- Tap into expertise – When you outsource particular projects, it allows you to leverage and tap into a global knowledge base. This allows you to have access to first-rate capabilities without needing the training and investment.
- Free up internal resources – Sometimes outsourcing is not about not being able to perform a task; it is about using internal resources in a more effective manner.
- Continuity and risk management – If there are periods of high employee turnover, it adds inconsistency and uncertainty to the business operations. Outsourcing can provide a level of continuity while simultaneously reducing the possible risks of substandard levels of operation
- Responsibility – There are a number of tasks that may be difficult to manage and control. Outsourcing allows for the benefits while not having to be bogged down with the complexities.
- Buffer capital funds – Many times small businesses use outsourcing to give themselves a buffer capital fund. It is possible to leverage this in a way that best suits the business.
The conclusion about outsourcing
Even though it may be time-consuming to take the first steps toward outsourcing, it can help you increase your economies of scale and efficiency by hiring outside professionals. There are some essential aspects of business where it does not make sense for the small business owner to deal with them personally. When a small business augments itself with a global pool of human capital through quality outsourcing, it can compete with some of the largest competitors on the market. It allows business owners to focus on their day-to-day and the aspects of business they excel at.
Chris Burgess is the CEO of Mailplus and has extensive experience in the courier services and business-to-business service market, having successfully franchised over 150 territories throughout Australia. Mailplus currently has franchises for sale in all major metropolitan areas.