Large corporations use outsourcing to offload their non-core operations so that they can focus on what they do best. Small and medium size businesses can benefit equally from outsourcing. Many small business owners do not feel comfortable with outsourcing thinking that it does not provide them sufficient benefits or they don’t like losing control of their business operations. This could be a mistake. When done properly, outsourcing can help small business owners grow by focusing on core operations.
Benefits of Outsourcing
As we already mentioned outsourcing can help small businesses focus on what they do best rather than having to worry about all the tasks they may not be familiar with or are prepared to tackle. Rather than spreading yourself too thin by running around in all directions outsourcing lets you worry about managing and growing your business. Without getting external help your business may not be able to live up to its full potential. There are times in the life of small business when external help is needed and outsourcing provides you that help.
Contrary to popular belief outsourcing also saves time and money. It may seem like you can save money by performing those functions yourself instead of paying someone else to do them. But as we all know there is no free lunch. While you save money by not paying to someone else, you pay for it indirectly by spending time on those and not being able to do other functions that can potentially bring even more money. In many cases you still have to pay to your internal employees when you don’t outsource, which typically costs more than paying an outsider.
What should be Outsourced
Before you outsource your business functions you need to ask yourself few questions to ensure you will get the promised benefits. Yes, outsourcing will save you time, but what you do with that extra time is important. If you can spend that time building up your business then paying someone else to do it makes sense. However, if you cannot use that extra time wisely you may be better off not outsourcing.
You should only outsource non-core functions of your business. For example, if you are running a retail business you can look into outsourcing accounting or IT functions. You are not really expert at these functions and someone else can probably do it with less money than you can. But you don’t want to outsource purchasing or store operations because they are core to what you do in retail.
Also, when you are just starting out the business it may not make sense to outsource. You should wait till the business is off the ground and is generating cash flow to support paying for outsourcing. This also gives you an opportunity to learn all aspects of business before handing over to an outsider.
Accounting Outsourcing
As mentioned earlier, accounting is one business function that is most suitable for outsourcing. Most business owners are not familiar with the rules and regulations on accounting. Making a mistake in this area can have damaging impact on your financials and can generate inquiries from the tax authority. Besides, accounting can take up lot of time away from running your business due to number of tasks involved in managing it. Companies such as Gibson Hewitt can offer great help in handling all aspects of your accounting functions, including payrolls, accounts payable, etc.
In summary, while large corporations can certainly benefit a great deal from outsourcing, it also enables small businesses to focus on developing and growing their business.
We would love to hear about your experience with outsourcing in the comments below.
