Outsourcing for Small Business

The phone’s ringing off the hook, employees are working overtime to handle the overload, and your website is buzzing with activity. These are all “good” problems we wish for, but are you ready if they become a reality? Today’s business happens at warp speed, and efficiency is a key hallmark of success. One way to gain efficiency is to focus your energy on the things that are of core value to your business. Keep those activities in-house, and put your non-core functions on the hot seat – even small business outsourcing is a reality in today’s business environment.

To make outsourcing work for your business, try the following:

Analyze your expertise

Take a look at the value you offer your customers and where you focus your efforts. Are you spending too much time on areas that are outside of your expertise? Many times, it is more cost-effective to have someone outside of the company take care of these non-core activities. Research various service providers and ask for referrals so you can start outsourcing functions such as logistics, accounting, IT services, payroll, public relations, and more.

"A small business owner should evaluate outsourcing just as any other business decision,” states Walter Turek, senior vice president, sales and marketing for Paychex, a national provider of payroll, human resource and benefits outsourcing solutions. “Criteria should include:expertise in performing the function, confidence in the service provider, return on time invested, risk versus reward, and peace of mind consideration."

Outsourced but not out of mind

Once you find an outsourcing vendor, be sure to keep your eye on the ball! Since you can’t just walk down the hall to oversee the quality and timeliness of outsourced work, continue to tightly manage whatever functions you outsource. Arrange for regular reporting to ensure accountability and effectiveness.

Move “fixed costs” to “variable costs”

Some functions in your business require only part-time work. An example might be bookkeeping. If your needs add up to only four days a week in bookkeeping work, then consider outsourcing. That will allow you to move the burden of “fixed” costs (in this case, a full-time salary) to the “variable” side (an outsourced vendor). In essence, you pay for the outsourced functions only when you need them.

Jump on opportunities from downsizers

Be aware that the rigors of this economy are forcing big business to shed non-core functions. After all, corporations must find ways to maximize profitability, which they do in part by reducing their expenses. Just as in small businesses, outsourcing allows big companies to move fixed costs to the variable column. Like you, they pay for the outsourced functions only when they need them. From a business development perspective, this may represent a trove of opportunity for you. You can develop an entire business model centered on providing services that used to be in-house at large companies.

Our Bottom Line

The primary message here is that outsourcing is here to stay and it should be something you entertain for your business. Concentrate on the key aspects of your small business, where customers find value, and outsource other business functions to outside experts. If you monitor vendors carefully and focus on efficiency, you’ll be positioned for rapid growth and success.

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