The legendary business consultant Peter Drucker once said, “Do what you do best and outsource the rest.”
In fact, outsourcing is a great way to give your business a boost as it passes through all stages of development.
So, no matter what stage you’re at in your startup journey, you need to strike the right balance between keeping certain activities in-house and outsourcing non-core activities.
As a startup owner, you may think that wearing several hats at the same time and doing everything yourself is the best way to cut expenses – especially when you don’t have the money to hire in-house just yet.
But when you reach the point at which you need to manage overwhelming workloads and tasks just keep piling up, then maybe it’s the right time to stop spreading yourself too thin.
Here is where outsourcing comes into play.
In this post, we’ll explore the far-reaching benefits of outsourcing for your small business.
I will also share the most common business functions that can be outsourced and give you a rundown on the glaring signs that show you should consider outsourcing.
Table of contents:
- How to decide what to outsource in your small business (and when)
- 7 ways small businesses can benefit from outsourcing
1. How to Decide What to Outsource in Your Small Business (And When)
You might have already heard that by outsourcing non-core activities, you can improve the performance of your core activities.
This is especially true when you have more than a handful of customers to serve and it becomes clear that you can’t operate every single function in your business yourself.
So, as you figure out how to navigate your small business’s growth, there will be an important question that you’ll have to answer early on, and that is “When is the right time to outsource?”.
As the old adage says, timing is everything, and this is applicable to outsourcing too.
Here are the glaring signs that it’s time to consider outsourcing:
- You are swamped with work and can’t keep up with tasks
- Customer satisfaction goes downhill as you are unable to deliver 24/7 outstanding customer support
- You lack the necessary skills to perform certain activities (e.g., creating optimised content to improve your SEO rankings)
- You’ve been burning the midnight oil lately and you’re experiencing a burnout
- You’re wasting good talent as your team is focusing on repetitive tasks instead of performing tasks that bring real value to your business
- You miss business opportunities because you’re drowning in tasks
- You have tasks you don’t enjoy doing that have languished on your to-do lists for months
If even one of the scenarios above sounds familiar, it’s a cry for help to stop wasting time on repetitive tasks that eat up your time and do not allow you to focus on your core business.
Once you’ve uncovered a need to bring an external force into your business, the next step is identifying which activities are ready to be outsourced.
These three steps can help you determine what tasks should be done in-house and what activities can be outsourced:
- Perform a cost-versus-time calculation: you may have the ability to perform certain activities in-house, but are they eating up valuable time you would otherwise spend working on strategic goals?
- Identify the areas where you lack expertise that should be delegated instead of wasting time trying to master them. Thinking you can do everything yourself and only asking for help as a last resort can cost your business time and money.
- Give each task a score to determine its level of importance. If an activity gets a low score, it would be best to outsource it. What you really want to do is focus on your core business and outsource mundane, repetitive tasks that are not vital to your business’s competitive edge.
Bonus tip: If you’re new to outsourcing, start by focusing on the very definition of core activities before determining the tasks that can be delegated to third parties.
Generally speaking, core business functions are areas that can give your business a significant competitive edge.
In business terms, this is called economic moat and refers to a distinctive advantage that enables your business to keep competitors at bay.
A core activity also has a direct impact on your business’s performance, influencing its ability to achieve the desired outcomes both in the long and short term.
If not properly handled, core activities can cause a chain reaction, negatively impacting all the other business processes.
While outsourcing is not a one-size-fits-all formula and the activities that should be outsourced can vary widely across different industries, here are some areas where you may be able to get external help:
- Accounting and payroll – If you’re not a financial expert and don’t enjoy keeping track of payables, receivables, business taxes, and payroll, then a skilled accountant can quickly take all of these tasks off your plate.
- Customer service – Even if you’re a fresh-faced startup with a small number of customers, you can’t answer every call you receive. Not to mention that answering your own phone makes you look unprofessional. To resolve this problem, you can outsource your customer service to a virtual receptionist who can take care of your customers and provide 24/7 coverage.
- Human resources – In the early stage of your startup, you may want to hire, onboard, and manage your team members yourself. However, as you grow, outsourcing your HR can help you alleviate the burden of recruiting, hiring and training the right candidates for a new position.
- Marketing – When you are crazy busy trying to keep up with running your business, creating social media posts and optimised long-form content is no easy feat. That’s why an outside marketing firm can help you overcome many of the marketing challenges you are likely to face.
- Information technology (IT) – This is one of the most common areas where businesses choose to outsource. Outsourcing IT is not the answer for every startup, but if you are running a remote team and collecting sensitive data from your customers, this is a great way to handle any tech issues you may have.
There are many ways outsourcing can benefit your business – outside of helping you free up valuable time and focus on your core business.
So, without further ado, let’s explore the great benefits of farming out some of your business activities to third parties.
2. 7 Ways Small Businesses Can Benefit From Outsourcing
- Reduced hiring and recruitment costs
Outsourcing piecemeal work and redundant tasks is almost always going to be more affordable than hiring in-house employees to do the work. For example, recruiting, training, and hiring a traditional receptionist is a huge cost. On the other hand, prices for a virtual receptionist can start from as little as $20 per month (such as B2B HQ’s most affordable virtual receptionist pricing plan).
- Increased efficiency
One of the most beneficial aspects of outsourcing is that it enables you to access a highly skilled talent pool with different qualifications to meet different business needs. This, in turn, will help you get tasks completed a whole lot quicker and improve operational efficiency.
- Reduced churn rate
Employee turnover is painful. Josh Bersin of Deloitte believes the cost of losing an employee can be 1.5 – 2 times higher than the employee’s annual salary. When tasks pile up and your in-house team members have responsibilities beyond what they were originally employed for, you’re at risk of losing your key people. That’s why partnering with a reliable outsourced team will positively impact your employee experience and reduce the churn rate.
- Increased flexibility
Many small businesses deal with seasonal peaks and valleys. Whether your business has seasonal products or changes according to the amount of work you receive from your clients, hiring contractors and consultants gives you more flexibility to cope with fluctuating demands.
- Reduced infrastructural costs
Outsourcing non-core activities frees up space and saves on purchasing office equipment and paying rental fees. All of these responsibilities are transferred over to the outsourcing provider, while you no longer have to invest in infrastructure development. As a result, you can dramatically reduce overhead costs by investing in a fully equipped, flexible virtual office rather than an expensive traditional office.
- Time zone advantages
Working with a team in another time zone can immensely benefit your business, as tasks can be given hours before the end of a shift. Depending on the location you are outsourcing to, tasks can be completed outside your normal business hours, without you or your team working overtime. Through outsourcing to different time zones, you speed up your turnaround time and benefit from round-the-clock business operations.
- Risk management
Another important benefit of outsourcing is the ability to share risks with providers. When you perform a business activity in-house, you are responsible for correcting any process failures and dealing with the consequences. But when you outsource, you do not need to deal with this issue, as your provider also takes over the risks related to the outsourced task.
Conclusion: Lee Kuan Yew once said, “if you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business”.
So, to wrap it up, let’s ask the question one more time. How does outsourcing help small businesses grow faster and unlock success?
Outsourcing makes a lot of sense for small businesses that need to free up time to focus on the core processes while keeping costs down.
When you outsource, you ensure that your business’s non-core activities are handled by an expert so that you can improve efficiency and productivity and compete with bigger companies in the industry.
B2B HQ is a virtual office provider in Melbourne with a proven track record of helping small businesses work smarter and significantly reduce overhead costs. If you need flexible office space or a virtual receptionist to outsource your customer support, do not hesitate to contact us to find out more about our services.