Outsourcing has become standard practice in many medium to large organizations, but small business owners are failing to take advantage of this model of working. The term outsourcing carries with it an association that it is only applicable to larger businesses, who will transfer entire sections of their operations to an external agency in order to improve efficiency and make cost savings. However, the advantages of outsourcing can be enjoyed by any size of business, even sole traders, if you apply the principle in the most effective way for your business needs.
What is outsourcing?
When viewed at its most basic, outsourcing is really just a case of identifying which elements of your business could best be managed by someone other than yourself and any staff you employ. For instance, if you have an office or a store, you probably get a window cleaner in on a regular basis. This is a very simple example of effective outsourcing – you find a specialist to do a job that would take up your own valuable time and require skills you may not possess. That principle can be applied to any aspect of your business that would take you away from your core role of management and business growth, and could be anything from cleaning, to marketing, sales, logistics, or accounting.
Identifying outsourcing opportunities
There are several key questions to ask yourself to determine whether you would be better off outsourcing a task:
- How much is this task costing the business if I or one of my staff continues to carry it out? Everyone in your business has their own value and cost, comprised of salary, benefits, training, facilities, and any other financial allocations they receive. By calculating how much someone costs your company over a year, you can work out what their hourly value is to your business. Therefore, your assistant could be costing the business say fifteen dollars per hour, whereas a cleaning service could be employed for ten dollars an hour.
- Do we possess the expertise to complete this task accurately and efficiently? Take your annual tax returns for instance. You may be able to keep accurate accounts through the year, but completing a tax return form is notoriously tricky. If you don’t have a detailed knowledge of the tax system, you could well make a mistake, or miss out on tax breaks you may have been eligible for. Using a tax accountancy service to complete your tax return for you will ensure you submit accurate data to the IRS, saving you not only time, but avoiding the stress of tackling something you might struggle with.
When used wisely and for the right reasons, outsourcing can provide many benefits to your business. You will save time and money delegating the most suitable tasks to agencies or freelancers instead of trying to keep everything in-house, and be able to concentrate your efforts where they are most needed – building your business and developing your strategy.