When you outsource, you use outside firms or individuals to handle work typically performed within your company. Although this concept is not new to many entrepreneurs and big companies, as they do this to stay efficient and cut costs, there are still small businesses that are hesitant about the practice of outsourcing.
If you’re a small business owner, outsourcing allows you to get more things done by allowing you to entrust important tasks and business processes to professionals without significantly expanding your full-time team. The transition to the new normal brought about a lightning shift into remote work, which isn’t always applicable for in-house workers alone. By outsourcing specific tasks to run your small business, you can increase efficiency and focus on the parts of your business that you enjoy and are good at, all while keeping costs under control.
If you are uncertain about considering outsourcing to run your small business better, you have come to the right place. In this article, we will share with you more benefits of outsourcing and business fields where you can consider it.
Small Business Outsourcing Methods
Small business owners think that only large businesses can enjoy the benefits of outsourced tasks thanks to their high expendable income. In contrast, today, small business outsourcing is reaping enormous benefits making it a feasible option. It frees up more time so that you can stay laser-focused on the core tasks that running a business entails. Of course, small business outsourcing has its risks; however, if managed properly, it can make a significant difference for small and medium businesses.
Outsourcing allows small businesses to stay on top of their productivity and workload efficiency and assign important tasks to experts without significantly increasing their workforce. Effective small business outsourcing is all about segregating functions that should be outsourced and tasks that should be retained in-house.
The Statistics of Outsourcing
In a study by Clutch in 2019, at least 37% of small businesses have started outsourcing a business process. But this post-pandemic number blew off in 2021, as proven by a survey they conducted with 500 businesses and organizations in the U.S. The study discovered that 80% of the respondents are looking into outsourcing to achieve many benefits, including overall productivity, business growth, and an opportunity to collaborate with industry field experts.
Here are the results of that study:
- 27% outsource to improve their efficiency and save time
- 19% outsource to support business growth and scalability
- 33% outsource to access flexible resources
- 26% outsource to work with an offshore expert.
Benefits of Outsourcing for Small Businesses
Businesses may outsource for various reasons such as increasing efficiency, available skills, or freeing up employees’ time for other tasks. Let us look at some of the advantages of small business outsourcing:
1. Better productivity
Outsourcing firms can help small businesses manage their time and focus on their core business capabilities. Many small business owners are under the impression that they can do everything and only realize the consequences once they're buried with small tasks they can’t handle on their own. By outsourcing, you eliminate the tasks that eat the most time, so you can focus on tasks that make a huge difference in attaining your business goals.
2. More time
For small business owners, time is one of your most valuable assets. Instead of dealing with customers, making sales, and earning money yourself, you can spend your precious time dealing with more important duties like enhancing your ROI. You can leave accounting books or designing your website to outsourcing professionals.
3. Better services rendered by experts
Outsourcing certain small business tasks means hiring an expert without you dealing with the risk of deteriorated quality. By outsourcing the right work to more skilled and qualified workers, small business owners can have more impactful results than if they handle the same work themselves.
4. More Cost-effective
Cost-cutting is a major factor why businesses of all sizes are turning to outsourcing. Did you know that it is much more affordable to get a task done by a professional externally instead of paying a monthly salary to a hired in-house professional? This increases your budget in other areas. Outsourcing can also make your business stand out to investors since you can harness more capital directly into tasks that generate the most revenues for you.
Outsourcing can also help you cut labor costs. Recruiting and training permanent workers for your company is expensive. With outsourcing, you can harness someone else's talents and expertise without breaking the bank or sustaining high overhead costs.
5. Focus on your core business
Small businesses have limited resources, and managers usually have limited time and attention. Outsourcing can help companies focus on work that directly serves the customer and help managers set their priorities more clearly.
6. Level the playing field
Most small businesses simply can’t afford to be at par with larger businesses' in-house support services. Outsourcing can help small firms act “big” by having access to the same scale, efficiency, and expertise that large companies have as an advantage in-house.
Areas Where You Can Outsource in Your Small Business
By outsourcing many parts of their daily functions small businesses can scale their business. Remember that for small business outsourcing to work, you need to generate more revenue than the cost of outsourcing. With this, the key is outsourcing time-consuming tasks that generate the most revenue for your business.
Here are some of the top areas where you might consider it outsourcing:
1. Information Technology (IT)
IT is one of the most prominent outsourcing industries today. You can outsource to a managed service provider or collaborate with an IT firm that offers assistance to take care of any tech-related issues or initiatives you may have.
According to a 2014 Deloitte survey, outsourcing adds up to cost savings of up to 40%. Managing your business’ IT sector with the help of external vendors or cloud solutions increases your business agility and allows you to function with more flexibility as your business expands.
2. Search Engine Optimization
Do you know how potential customers and your audience will discover small businesses today? They do it by looking at search engines. This is why having an excellent online presence by an optimized search engine will do wonders for a small business like yours.
Search engine optimization (SEO) requires much industry knowledge and can be considered a marketing feature. Social media platforms like Facebook, Instagram, Tiktok, etc., play a massive part in SEO rankings, so employers need to have a solid foundation for social platforms. Small businesses outsource their SEO and social media presence to more knowledgeable professionals.
3. Accounting / Finance
60% of small businesses tried to perform their accounting and finance functions in-house. Outsourcing this task to a professional has reduced costs and improved compliance. A skilled accountant can easily manage this area for your multiple businesses all at once. This increases efficiency and saves you money.
Businesses that outsource salaries can save 18% more by reducing the time entailed by mistakes and inaccuracies.
4. Hiring, recruitment, and Personnel Management
Three out of four US small businesses say hiring a freelancer allows them to be more competitive in the industry. Virtual assistants are also a popular outsourcing solution because they are just a click away from affordable management professionals. You can also turn to outsourcing for human resources, which includes hiring, onboarding, or managing your team.
5. Digital Marketing
Today, e-commerce, digital marketing, PR, social media, web design capabilities, operating online shops, and social media are more critical than ever for small businesses. To grow your business online reach, an outsourced marketing firm can help you do it better with less time and cost. They can take the ad design, content creation, or social media posting off your hands so you can focus on your business's more crucial internal functions. Additionally, you’ll be able to meet professionals who can help curate creative ideas and strategies to grow your business.
As a small business, you can outsource fulfillment, warehousing, and delivery activities to third-party providers to reduce your overall costs and improve your customer service. Of course, this depends on the size of your business and the type of product or service you sell.
7. Customer support
For small businesses that deal with customers online or over the phone, you can outsource your customer service functions to an outside call center or chat service. To do this, you first need to have practices, processes, and regulations in place and make sure you provide instructions to the company that will be dealing directly with your customers.
8. Website Design
Hire a skilled agency to take care of your website. This is a great way to grow your digital assets. Bugs or system failures? Let the outsourcing firm take care of that for you.
5 Factors to Consider When Partnering with Outsourcing Firm
There are five key factors to consider to avoid financial risks and make the most out of outsourcing.
Data confidentiality and safety: Losing your data, including your clients’ and any financial information, will put your company in danger. It’s best to keep your financial operations in-house.
In-house abilities: Keep it in-house if your company has all the human resources to perform a task. However, outsourcing is an option if there is a lack of in-house resources.
Stability of the country you are outsourcing to: Before outsourcing to another country or delegating part of the tasks to third-party partners, examine the country’s political and economic environment and consider all risks and the job market.
Control over the process: How much control does the outsourcing firm like to have over the process? Before sharing the responsibilities with a third party, this is a crucial question.
Language and Culture: Working with an organization with a different working culture than yours may be difficult and directly impact how the business operates. Language differences can become a hurdle in explaining your goals and what you expect from the project.
Small Business Outsourcing In A Nutshell
When small businesses outsource tasks to contractors, freelancers, and third-party agencies, they gain flexibility. Outsourcing various duties give business leaders more time to focus on the bigger picture and their specific industry. Outsourcing also ensures that the business gets an expert to complete specific tasks instead of someone from the business taking on responsibilities outside their knowledge base.
As a small business owner, when you outsource various duties, you have more time to focus on the bigger picture of running your own business.