Most, if not all, entrepreneurs start by being personally responsible for all aspects of their nascent businesses including marketing, HR, sales, accounting, distribution, and so on.
As your business grows and the workload bulges it soon becomes apparent that you can’t do everything on your own. Getting help becomes a necessity for facilitating a smooth ongoing of business operations and sustaining growth.
Outsourcing, i.e. hiring third-parties to handle a business enterprise’s various tasks and duties, will allow you as a small business owner to concentrate on your core business areas and in the long-run allows your enterprise to take up even more business. Outsourcing can therefore be said to be a facilitator of small business expansion and growth.
Your decision to start outsourcing is most likely going to be informed by long-term strategic considerations. You, the entrepreneur, will basically be responding to thoughts about where you would like your business to be after a certain period of time, and how this is going to be achieved.
What are some of these strategic considerations that will compel you to start outsourcing?
1. Dealing with rapid growth
The need to start outsourcing dawns on entrepreneurs when it becomes evident that running a one-man-show is no longer feasible.
Unlike big companies which can simply hire new people for required positions, your limited resources are what will make outsourcing such a practicable solution.
Indeed, the need to reduce costs is, at 36%, a massive reason why businesses decide to start outsourcing.
While retaining the task of finding new business, therefore, gradually delegate aspects of your operations to competent third-parties.
2. Reduction and moderation of operating costs
As a small business owner you need to see the bigger picture.
Where would you like your business to be in the next 3-5 years?
Outsourcing will give you much more flexibility in terms of cost-cutting and investment options.
Dealing with variable costs instead of fixed costs means that you’ll have more capital to invest in other areas of your business than would be the case if you first had to spend big to acquire capital assets for your young venture.
You’ll also be a more attractive target for potential investors seeing as more of your capital is being employed to directly generate more revenue.
3. Quick responding to new business opportunities
A business that outsources its requirements is no doubt adaptable enough to exploit new business opportunities faster than another that insists on doing everything in-house.
While the former simply needs to find extra people to do the work, the latter must first find suitable candidates, hire them and provide a suitable working environment.
Additionally, a firm that outsources is well placed to take advantage of short-term projects even if a substantial capital investment is initially required.
4. Defining your focus
This is about identifying the non-core areas of your business and outsourcing them to third-parties.
Say you have a fresh fruits and vegetables supply business. Your core business is to ensure that you always have fresh produce for your customers. You simply have to find different people to supply you with the best apples, oranges, tomatoes, etc.
Attempting to grow everything you need for this business will not only be counterproductive but practically quite impossible. The best way forward would certainly be to concentrate on finding more customers and while increasing your supply requirements as you go.
5. Taking advantage of world-class skills and expertise
A sure sign of a well run small business is that the owner works with other professionals who are better qualified to handle particular aspects of operations.
An upcoming record label, for example, can expect better social media traction if it opts to outsource this requirement to a person who knows all about creating and maintaining a strong brand in social circles.
Working with such qualified professionals will not only be cost-efficient but also an opportunity to get great value on your investment thanks to their expertise. Additionally, being associated with great value will continually attract more and more people to do business with you.
6. Getting the most from limited finances
While your business may be doing quite well presently it may be the case that you’re not getting big checks just yet. Outsourcing rather than long-term binding contracts will therefore make much more financial sense.
Hiring freelance writers, for instance, will work out much better than hiring full time in-house writers for whom you’ll need to provide medical benefits, paid time off, etc, not to mention investments including office space and equipment. With freelance writers you’ll not only save money but you’ll also be able to pursue new revenue streams that’ll bring in more money.
7. Increasing competitiveness
Even as your business grows it is worth remembering that you are one among many enterprises, both big and small, that are fighting to get a foothold in the market. To be successful therefore your business needs a competitive advantage.
Outsourcing will allow your business to harness a collection of different skills and capabilities that are vital for industry success. You will also be in a better position to compete alongside bigger establishments that have more financial muscle. Simply, as a result of outsourcing, your business will, like a large firm, gain economies of scale, and more expertise and efficiency.
8. Reducing your risk exposure
As an entrepreneur you must always keep an eye on industry trends in order to align yourself with changing times. Things can change rapidly in the volatile world that is business. Conditions that make your business viable today may cease to exist tomorrow.
Outsourcing can be an effective way to shield your fledgling business from abrupt demise when this happens because your investments will only be limited to the short-term. In most cases your ties to a third-party are technically severed when a task is completed and paid for.
9. Building a credible employer brand
When entrepreneurs decide to start outsourcing they hardly think about what impact being an employer can have.
Think about it though.
Are there benefits to expect from working with others in a professional and transparent way?
There sure are.
A reputation for being a credible employer means that you are accessible, professional and refined. Many people want to work with such professionals; it’s why having recommendations on platforms like LinkedIn adds a big plus to your resume.
From a business point of view, outsourcing is perhaps the best way to agree with the old adage “no man is an island” considering the cost-effectiveness and efficiencies that accrue from taking this initiative.
In what different ways have you used outsourcing in your business and what benefits were gained from each?