About 80% of small businesses were expected to outsource some part of their business in 2021. That trend of outsourcing continues as small businesses try to make the most of the resources available.
What is outsourcing? It’s the process of hiring outside individuals or firms to handle different aspects of your business.
Every business in every industry has something to gain from outsourced solutions.
For managers and small business owners, there’s a hesitancy to outsource. They don’t want to let go of control or see outsourcing as another expense.
They also get overwhelmed because they don’t know what to outsource. If that sounds like you, you’ll want to keep reading.
We’re going to tell you the top business functions to outsource, the benefits of outsourcing, and how to do it successfully.
1. Accounting and Bookkeeping
What’s the difference between accounting and bookkeeping? Bookkeeping involves data entry of transactions, reconciling accounts, invoicing, and sometimes collections.
Accounting involves tax filing, compliance, and financial reporting.
Both functions are vital to the financial health of your business. A late tax payment could result in fines and penalties for your business.
2. Information Technology
Companies paid about $350 million in ransoms because they were hit by cyberattacks. Ransomware attacks are one method hackers use to extort money from businesses.
There are hidden costs of cyberattacks such as lost productivity, insurance premium increases, and reputation declines.
Cyberattacks are only one part of information technology. Your business relies on IT for promotions, sales, and accepting payments.
IT management also takes a high level of expertise. Hiring managed IT services ensures your network has the latest security technology. Your network runs as efficiently as possible.
3. Human Resources
Whether you already have a team of employees or you’re gearing up to hire your first employee, you should consider outsourcing human resources.
HR companies work with you to develop job descriptions, interview candidates and screen them. You save a lot of time because you don’t have to read resumes and decide who gets called in for an interview.
They can also help with onboarding and payroll management. Considering that business owners spend at least 5 hours a pay period on payroll, this is a smart way to leverage outsourced solutions.
4. Graphic Design
Consumers form an impression of your business based on the design of your website, flyers, and other visuals.
If you lack design skills, you could do more harm than good by trying to create visuals yourself.
Outsource graphic design to a professional designer. They’ll take the time to understand the brand, target audience, and create visuals that connect the two.
5. Marketing
There are dozens of marketing tactics to reach new customers. Social media, PPC ads, SEO, retargeting, video marketing are just a few of them.
It’s easy to get lost in the tactics without developing a comprehensive strategy for your marketing efforts.
Outsourcing marketing gives your marketing a clear purpose. Marketing delivers quality leads and a return on investment.
6. Manufacturing
One of the biggest costs for startup businesses is manufacturing. You’d need to invest hundreds of thousands of dollars to purchase a manufacturing facility.
That’s a big expense for an unproven product.
Outsourcing manufacturing allows you to share resources with other businesses. That lowers your production costs and makes you more competitive in the marketplace.
It’s possible to hire a manufacturer to produce a product under a private label. They provide the product, while you provide the brand.
If you have a unique product, then you’ll want to hire a third-party manufacturer.
7. Order Fulfillment
It’s expensive to maintain a warehouse and manage order logistics. This is a challenge for small ecommerce companies.
They end up operating out of a garage and handling shipping themselves. That’s too much time and energy spent on order fulfillment.
The best way to handle orders is to find outsourced solutions providers that specialize in order fulfillment. You send product inventory to the provider, they receive the orders as they come in, and ship them out to customers.
They charge a flat fee for each order, usually around $5 per order.
Depending on your product, you might be able to work with a dropshipping company that handles manufacturing and fulfillment.
Orders get sent directly to the dropshipper and they handle the rest. You handle sales and customer service.
8. App Development
Business happens on mobile devices. Mobile commerce is going to make up 10% of all retail sales by 2025.
If your business isn’t mobile-ready, you’ll miss out on a great opportunity to get sales. Most websites are mobile-ready, but if you want to expand your brand, you need a mobile app.
You could hire staff in-house to create the app. That will cost thousands of dollars, and pull your IT staff from working on other important projects.
Outsource app development to a company that specializes in mobile apps. They’ll deliver the project faster.
9. Customer Service
A growing business means you have more customers. That’s a good thing until you have to deal with customer service issues.
Customer service is a critical part of the business. About 72% of consumers are willing to spend more money if they know they’ll get better customer service.
Happy customers translate into happy employees. That reduces the amount of employee turnover and improves your profitability.
One common method for outsourcing customer service is to hire a firm to handle off-hours questions. Customer service that’s available 24/7 makes your business more credible.
You can have your staff handle escalations and questions during business hours. The other option is to have a company handle all aspects of customer service.
10. Administrative Work
Administrative work involves things like calendar management, email, data entry, report generation, website updates, travel arrangements, and handling appointments.
There are additional repetitive tasks that do often, such as answering the same questions via email.
These things are usually small tasks that take a few minutes to do. Multiply the minutes by the number of times a day you do administrative tasks.
You start to realize how much time you spend on these things. Handoff administrative tasks to a virtual assistant.
These are people who specialize in organizing the small details of your business so you can focus on other things.
11. Sales
Do you think you’re the best salesperson for your business? How much time do you and your sales team spend on low-quality leads?
That impacts your close rate. It also affects how much revenue you have coming into the business each month.
It is possible to outsource the sales process to a third party. You can hire people to cold call prospects and qualify them.
Qualified leads get handed off to the sales team to close. That makes the most of everyone’s time and your sales process is much more effective.
Benefits of Outsourcing
There are a number of benefits of outsourcing. The two key benefits are the cost of outsourcing and the time savings you get as a small business owner.
The cost of outsourcing almost always is less than hiring in-house employees. Take hiring an IT professional or developer for a full-time role in your company.
The median salary for an IT professional is over $90,000 a year. You have to pay for a generous benefits package on top of that to attract the best employees.
It’s unlikely that your company has that kind of money to hire a top-level IT professional. You also know the importance of IT in your business.
You’re able to afford experts by hiring outsourced solutions. You can usually find experts in a Global Employer of Record company. These companies have the expertise and experience to help businesses reach their goals.
Business owners have to wear a lot of hats and become experts in everything. You don’t have time to learn the ranking factors of search engines, graphic design, web development, business law, and serve your customers.
Outsourcing allows you to gain the expertise and experience of others to grow your business.
How to Outsource for Success
The big fear of many businesses as they start outsourcing is that the quality of work suffers because outsourced solutions aren’t invested in the business.
It’s not necessarily a matter of a company not providing the quality of work you expect. It’s a matter of hiring the right company that meets your business needs.
The worst-case scenario is that you hire someone to take on a project and you end up redoing the work. That sets your business back money and valuable time.
To prevent that scenario from happening, here are a few things you can do to ensure a fruitful partnership with outsourced solutions.
Start by recognizing that you can’t do everything on your own. That means you’ll have to let go of control a little.
Look at your time and resources. What are the things that you drag your feet at doing but know they’re important to your business? Where do you spend a lot of time?
For some, that’s writing blog posts. For others, it’s bookkeeping and payroll. These things are important, but your time might be better spent on revenue-generating activities.
Make a list of projects and activities that you can outsource. Prioritize that list by the level of importance and expertise required.
IT and accounting require a high level of expertise that you probably don’t possess. They’re also crucial to the operations of your business.
Start Small
It doesn’t make sense to hand the keys of your business over to someone you don’t really know. The best way to build trust is to start with small projects first.
You might hire a CPA to help you with your taxes, then hire them to handle payroll and other financial responsibilities.
An IT provider can provide an initial audit of your infrastructure. If you’re happy with the quality of work, you can scale up slowly. Eventually, they can be a managed IT service provider.
Clarify the Scope of Work
Communication is key to making outsourcing work. You can’t go into a project without a clear set of goals and expectations.
Outline exactly what you want a solution provider to do and set goals for the project.
Set a Budget
How much money can you afford to spend on outsourced solutions? There are solutions providers that fit all budgets.
Don’t look at outsourcing as another operations expense. View the expense as an investment because you’ll see a return on your time. Depending on the service, you’ll see additional revenue and cost savings.
Interview Solutions Providers
Get recommendations and look online for potential outsourcing companies. Interview the top three to five companies.
Prepare a list of questions to ask each outsourced solutions provider. Ask them about their experience, the types of companies they work with, and the challenges they solve.
Find out who will handle your account and their experience. Understand their communication style. Some companies only contact you if there’s an issue, while others regularly contact you.
Hire an Outsourced Solutions Provider
Outsourcing companies have a contract of work. Read this carefully because this outlines the work they perform and don’t perform.
Have an onboarding plan to welcome the outsourced team. The onboarding process introduces your business, goes over technical specifications and project details.
Make the Most of Outsourced Solutions
Businesses large and small need to find creative ways to gain a competitive edge while preserving resources. One of the best ways to do that is with outsourced solutions.
You can make the most of outsourced solutions for all aspects of your business, from accounting to sales. Head over to the home page of this site for more business insights.
