5 Pros of Outsourcing for Small Businesses

pros of outsourcing small businesses outsource benefits

Did you know 54 percent of all companies outsource at least one function to a third-party service provider? Or that the rapid rise of the gig economy is a direct result of the need for businesses to outsource?

Although the numbers prove that outsourcing is the way to go, you might be reluctant to outsource some of your in-house functions. Perhaps you believe that there aren’t qualified services providers out there or that outsourcing is an expensive option.

Well, we’re here to prove you wrong!

Continue reading to learn more about the pros of outsourcing.

1. Easy Access to Skilled Expertise

As an entrepreneur, you're probably an expert in one or two fields. If you are an inventor, for example, you might only be knowledgeable in product design and development.

When it comes to running a business, however, you need a wide range of skills. You must have a good understanding of accounting and payroll management, human resources management, sales and marketing, and more.

Do you have all these skills?

Although most starting entrepreneurs wear multiple hats, this isn’t always the right thing to do. You have two options: hire in-house specialists or outsource.

Outsourcing is the easiest way to gain access to skilled expertise. You don’t have to go through the tedious recruitment process. What’s more, there are lots of established outsourcing companies in the market. Finding the best one isn’t as challenging as recruiting new employees.

2. Improve In-House Efficiency

When you handle everything in-house, you need a bigger team, which needs a larger space and more equipment. If you’re operating on a shoestring budget like most small businesses, you don’t have the resources to grow your time or secure a larger space.

As such, you have no choice but to make the most of what you have. This involves allocating multiple tasks to a single employee, even when they don’t have the right training or skills. This negatively affects their productivity, which in turn lowers the entire team’s efficiency.

This is why outsourcing some tasks can give your in-house efficiency a major boost. Here’s why.

Outsourcing gets some tasks off your employees’ hands. As a result, they’re left with tasks that are within their skillset. They will be more efficient and productive.

On an individual level, and especially if your business is a one-man show, outsourcing enables you to focus on your core activities. If your startup sells an innovative product, you’ll have the time to keep improving the product while outsourcing companies take care of other tasks.

3. Make Big Savings

Talking of budgets, did you know several small businesses fail because they run out of capital?

If you don’t want your business to join this statistic, you have to focus on keeping your overhead as low as possible. An effective way to achieve this is to utilize outsourcing companies.

Here’s an illustration.

Let’s say you’re debating between hiring an in-house digital marketing specialist versus outsourcing to a digital marketing agency.

To hire, you must advertise the position, review applications, conduct interviews, and onboard the successful applicant. On average, it takes 42 days and $4,129 to hire a new employee. Add in their salary and benefits and the amount skyrockets.

On the other hand, hiring a digital marketing agency is as simple as doing online research and making a pick. You can have an agency by the end of business tomorrow, and the set-up fee for most agencies is anywhere from $500 to $1,000. You will then establish a marketing budget that suits your needs.

Clearly, outsourcing is the cheaper option.

You’ll not only save big but also gain access to a wide range of digital marketing specialists, from SEO analysts to web designers and content creators. If you go in-house, you might end up hiring three new employees to fill these digital marketing roles.

4. Keep the Lights on 24/7

As a small business, you probably have opening and closing hours.

Don’t you think you’re leaving money on the table by not being a 24-hour business?

Perhaps you’re saying “but I have a website that keeps my business online!”

Well, having a website is a good start, but it doesn’t mean your business is operational round-the-clock. Customers who leave queries on the website during the night will not get a response until the next business day.

By outsourcing some tasks, you can solve this challenge and keep the lights on 24/7. For example, outsourcing the customer support function to a call center means your customers will receive responses regardless of the time they decide to contact your business.

This will help improve the reputation of your brand, as well as customer loyalty. Your sales will increase too.

5. Avoid Legal Issues

Businesses operate within a set of laws and regulations. You must comply with the relevant regulations and strive to meet industry standards.

However, when you’re doing everything on your own or in-house, it’s easy to make mistakes that can lead to regulatory violations.

For example, if you’re not a tax expert, you might make mistakes when filing business taxes. If you under-report your income, you could face tax evasion charges. Outsourcing this function to a tax and accounting service is the best way to avoid violations that can lead to audits and hefty fines.

Reap the Pros of Outsourcing

If you’ve been on the fence about outsourcing, it’s clear you need to jump over. These pros of outsourcing will give you a competitive advantage and take your business to the next level. Now, the only task on your plate is to find the best outsourcing companies.

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