Will Outsourcing Strengthen Your Business Model?

As a leader in a small business, your primary concern is how to maximize the resources at hand to yield the greatest profit margin while satisfying end users. Of course, you also want to expand your customer base and keep your employees happy.

So, at some point, outsourcing may have crossed your mind as one of the many ways to accomplish this objective. This may be an option worth considering, so here are just a few ways to know if the benefits will outweigh the costs:

Benefits of Outsourcing

  • More cost-efficient: When you outsource pertinent administrative tasks such as payroll processing, funds otherwise spent on payroll expenses can be freed up and allocated elsewhere. In addition, staff members become more efficient because the decreased workload reduces the funds needed for systems training and internal quality control.

  • Equal opportunity: Hiring a reputable outsourcing firm ensures high quality work is delivered in a timely manner at a fraction of the cost that may have been otherwise wasted on complex training programs, temporary hires or inexperienced employees. Also, youíll be able to access ďthe same economies of scale, efficiency, and expertise that large companies enjoy,Ē notes AllBusiness. Most importantly, you can focus on the bigger picture and improve revenue generating activities.

  • Rapid turnaround time: Oftentimes, undertaking a major project in a small business with limited staff requires you to divert the attention of staff members away from their current projects. This could be detrimental to the profit margin depending on the training required and the amount of missed opportunities. However, by enlisting the assistance of an outsourcing firm, you can begin almost immediately with the end result in mind.

When You Should Outsource

Understanding when to integrate outsourcing into your current model is essential. Here are a few indicators it's time to get on board:

  • Youíre short staffed. Increased workloads often increase the risk of costly errors, which can easily sink a small business.

  • Itís more cost-efficient. When calculating this figure for a certain task, be sure to include the cost of training and continuing education to in-house staff.

  • The project is non-recurring. If it is not a major component of your model or it will require a ton of manpower, it may be worth outsourcing.

  • A bulk of the employees are working in, not on the business. If most tasks are operational in nature, outsource them and focus on what you do best.

  • Employee personalities are not compatible with the task. Assuming youíre in an industry riddled with introverts, itís not worth losing a lucrative client over a customer service conflict.

How to Incorporate Outsourcing

When you are considering how to incorporate outsourcing, Entrepreneur recommends that you conduct a detailed assessment of the company to determine which areas would benefit most from outsourcing. However, a word of caution: refrain from delegating out core competencies because these give your company a competitive edge and you donít want your staff members to feel inferior or like they are on the chopping block.

For example, if youíre an insurance provider with an overworked sales team, lighten the load by using a firm like QuoteWizard to purchase leads. This allows your team to maintain control over their job and focus on the most significant component, which is closing the sale. Some other examples include using freelance writers for a creative agency where the client load fluctuates monthly, printing for a small publishing company without the adequate machinery, an IT help desk agent that is always on call for a small accounting firm or an answering service for the busy plumber who canít afford an in-house call center.

Before you take the leap, do your homework. Ask around for recommendations, post an advertisement or use an online database such as Elance to recruit talent. Then, perform your due diligence by conducting background and reference checks. To make it official, get everything in writing so both parties are clear on expectations and rates.

The bottom line is, when you can no longer balance operational building tasks without being overwhelmed, itís time to think outside the box.