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5 Advantages of Outsourcing to Scale Your Small Business

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Existing in a complex economy means your business has access to a large amount of highly-specialized firms and individuals. As a small business owner, it’s important you make good use of these firms and individuals through the practice of outsourcing. And do to this, you need to make sure you’re outsourcing the right things to the right people, asking all the important questions before you begin.

However, despite its potential to support your business, a surprising amount of small enterprises still don’t outsource. Content marketing and certain accounting functions, such as tax preparation, are two of the most common functions firms outsource, but there are many more options. For example, you can outsource IT and customer service, and even human resources.

And outsourcing just makes good sense. As a small business with limited resources, you need to focus on what you do best, something outsourcing lets you do. So then why are so many businesses still holding on and doing everything in house? The answer lies in a general misunderstanding about how outsourcing can help grow your business, not just maintain it and make it easier to run. Not convinced? Here are five advantages to using outsourcing to grow your business.

outsourcing

Bring Down Costs

Being strapped for cash as a small business is nothing to be ashamed about. In fact, if you’re not, or at least pretending like you are, then you’re likely doing something wrong. No matter how much your business grows, you should always focus on reducing costs and minimizing risk. But as a small business, this sensation of not having enough can dramatically reduce your ability to grow. It’s harder to get a loan as a small business, and this might not always be the best option, meaning you need to find other ways to get the cash you need to grow.

Enter outsourcing. Many of the firms you can outsource to are highly-specialized. They dedicate all of their time and resources to doing one thing, such as payroll management or digital marketing, for example. And because companies like yours are their main clients, it’s in their best interest to offer you a great price.

These savings are then passed onto you, which will allow you to invest in the growth of the company. Perhaps you’ve been meaning to roll out a marketing campaign, or redesign your website, but you just haven’t had the cash. Outsourcing some key functions can free up the resources you need to immediately pursue these growth strategies.

Maximize Employee Productivity

However, it’s important to remember that outsourcing isn’t always cheaper. Make sure to do a thorough cost-benefit analysis (check out this resource to help you do it right) to determine how much you are spending on something versus what it would cost to outsource. If it costs you the same or more to do it on your own, then outsourcing is a sure thing. But there is even an argument to outsource when the cost is higher. Specifically, it’s a good idea to outsource a task when performing it takes away from your employees’ ability to do their jobs.

For example, you may save money by keeping recruiting, benefits and onboarding tasks in-house, but all the time your employees spend doing these jobs keeps them from working on higher-level, higher-value aspects of HR, such your candidate experience and employer brand.

In this scenario, you could outsource these more “day-to-day” tasks to a professional employer organization (PEO) and then have your employees focus on the things that will contribute more to the growth and long-term success of the company. Even if doing this is slightly more expensive (even though often times it isn’t), it’s still worth it, as it allows you to make the most of your most important resource: the people who work for you.

Make Use of Experts

As small business owners, it’s easy to fall into the trap that we know everything there is to know about our business. This may be true for some things, but not for everything. We may know everything about our business, but welikelyy don’t know everything we need to about how to grow it. For example, while you may be an expert on the many different ways your product works and affects the lives of your customers, how much do you know about search engine optimization or social media marketing? If you don’t come from this background, then chances are your answer was “not much.”

If this is the case, you have two options:

  1. Train your employees to do what you can’t; or
  2. Outsource

The first option might seem tempting, but you once again run into the challenge of maximizing employee productivity. You can train your current marketing team to operate in the digital space, but is that going to sacrifice the quality of their other work? And if it is, then would you have to hire more people to make sure all tasks are getting done to the highest standard? And if you do this, how much money do you really end up saving?

The answer is, once again, “not much.” Hiring new employees is always more expensive than working from within, and we know the productivity costs of stretching people too thin. Outsourcing presents the opportunity for you to get the best of both worlds: it’s cheaper, but you don’t have to sacrifice quality.

Learn to Delegate

One of the hardest things we need to learn to do as people is trust others. Experience pushes us away from doing it, and often times small business owners get stuck thinking they need to have their hands in every department for things to run correctly. But if this is true, then one of two things is also true about your business: either you’ve hired the wrong people or you need to learn to delegate.

For most, it’s far more likely to be an issue with your management style rather than your judge of character. But jokes aside, not being able to delegate is going to seriously affect your business’ ability to grow. Not only will people feel micromanaged, and therefore less excited to work, but you yourself will be distracted from doing what you do best.

Maybe you’re the financial whiz who helps plan investments, or perhaps you’re a marketing guru who can make social media your best friend. It doesn’t matter what it is, but the success of your business will depend on how much time you are able to dedicate to what you do best. And outsourcing can help you maximize this and put your company in the best possible position for growth.

Streamline Your Processes

Last, but certainly not least, outsourcing will significantly thin out your company. It will help you get rid of redundancies and inefficiencies, making it easier for you to understand your resources and use them to help the business grow.

It’s normal for your business to develop ways of doing things that just don’t make sense. In the beginning, when your group is small, you find ways to make things work. This might result in something simple, like the approval process for sending out paychecks, bounce between four different people across different departments. This not only slows the process down, but it wastes people’s time.

Outsourcing this function will effectively remove it from your organization. Someone may still have to put their signature on something, but this request will come straight from the payroll company, and you’ll be able to complete it in a matter of seconds. Imagine that! And you can do this for more than just payroll, helping you optimize all of your processes and save time and money that you can invest in the growth of the company.

Start Outsourcing to Grow

The benefits of outsourcing in the growth of your company should now seem abundantly obvious. The only thing left to do is to start finding ways to make outsourcing work for your company. Begin by identifying the functions that take up the most time and money, or those that could be done better by others, and then start looking for some help. After you do this, you’ll soon start to experience the powerful effect outsourcing can have on company growth.

How are you taking advantage of outsourcing for your small business? Tell us in the comments below!

 

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Jock Purtle

Jock is a successful entrepreneur and business owner. He's founded three companies over the course of his career so far and he loves sharing advice and tips with others. His specific areas of expertise include business valuation, business growth and digital strategy.
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