As a small business owner, you’re constantly wearing many hats. On any given day you could be inspecting the latest inventory shipment, interviewing prospective employees or even sweeping the showroom floor after closing. However, if you find yourself being pulled in too many directions or experiencing a level of growth that you can no longer manage on your own, it might be time to consider outsourcing some business functions.
Unlike delegating tasks to an employee, outsourcing involves contracting with a third party to provide an ongoing task that keeps your business running. The best and easiest things to outsource are operations that require a specific skill set, but aren’t your business’s primary function.
If you’re considering outsourcing some of your business functions, then congratulations are in order — outsourcing is an indicator that your business is going well and you’re looking for ways to improve.
Here are some signs that it may be time to bring in some support.
Your business is growing, and you want to focus on growth potential.
Running a business is time-intensive and there may be some tasks that you don’t have the resources to handle anymore. Outsourcing some functions could allow you to free up more of your bandwidth; you can devote your time to high-growth initiatives in your business or focus on strengthening the core products or services you offer.
You’re not an expert in a specific skill.
Every business needs to file taxes annually, but that doesn’t mean you know the ins and outs of the increasingly complicated business tax code. This is why some businesses lean on the expertise of specialists and outsource filing their taxes to certified public accountants (CPAs) who are more familiar with tax laws.
You need to meet seasonal demands.
Maybe your business is driven by seasonal swings, with more demand for shipping near the holidays. If that’s the case, then outsourcing your shipping might be a way to increase production and manufacturing without having to worry too much about shipping logistics.
You can save money.
Let’s face it: Employees are expensive and hiring — especially in this tight labor market — can be a challenge. If your business is tight on cash, hiring a full-time employee may not be the best option. Over 4.3% of personal loans taken out last year were for business expenses, so if you’re scrambling to find the funds for the salary and benefits, outsourcing could be a more affordable option to get the services you need.
But outsourcing isn’t always the solution
Though outsourcing has many advantages, sometimes functions or roles might need to be performed in-house. Here’s a couple reasons when outsourcing might not be right for your business.
You don’t have the money.
Yes, outsourcing can save you money when compared to staffing costs. But if you’re seriously strapped for cash or facing a huge loss — like when industries were shuttered under the pandemic lockdowns — then you may not have the capital to spend.
You’re facing a one-time problem.
Outsourcing is best for routine, recurring tasks, not one-time special projects. For example, it might make sense to outsource social media to a marketing firm to manage a regular posting schedule. But, if your business needs graphic designs to promote a special one-time event or sale, that task might be better suited for a contract with a freelance graphic designer or a college student looking to build out a professional portfolio.
The task is better performed in house.
Whether it’s because the function involves security concerns or it requires a high degree of knowledge about the business or the industry, some jobs are better to keep in -house because of the level of expertise they require.
The task is mission critical to your business.
Similarly, if the task is central to the core purpose of your business, it might make more sense to hire an employee. Most of the time, you can’t “train” a contractor without classifying them as an employee, so if a specific job must be performed a specific way (opposed to just ending with an agreed upon result, no matter how it’s achieved), you’ll want to establish an in-house position.
Nine small business services you can outsource
Outsourcing routine functions might help improve efficiency or free up resources so you can focus on growth. Here are nine services your business might be able to outsource that can help you save overhead and time.
Accounting
When it comes to bookkeeping and filing taxes, accounting is one of the most common areas small businesses outsource. Accounting firms are up to date on the latest small business tax regulations, which make them well-equipped to handle your business finances.
Administration
If you need support with administrative tasks like scheduling appointments, managing an inbox or even making phone calls, look into using a virtual assistant or VA. Virtual assistants are contractors who work remotely to provide clerical support. A VA may be more affordable than hiring an employee as an administrative assistant or receptionist, but costs may be higher for a VA with expertise in a highly technical or specialized field, like the medical or legal sectors.
Customer service
If your business involves managing relations with customers, consider outsourcing your customer service phone line or online chat systems. Some customer service firms have a global reach, so outsourcing these functions could help your business offer 24/7 support and be more responsive to customer concerns.
Human resources
Human resources is a necessary part of any business that has employees. You can outsource common HR functions like recruiting, benefits and training with software programs or firms that focus on one or more of these services.
Information technology
Information technology (IT) is another function that could be easily outsourced. IT firms can set up your devices, internet and file sharing systems and provide troubleshooting or maintenance.
Marketing
If you want to grow your business, you’ll want to invest in marketing. This could be a good function to outsource — like IT and accounting, there are firms that specialize in it. Outsourcing functions like social media outreach and digital advertising would enable you to focus more time on production.
Sales
Maybe you need to generate new leads or conduct market research to build your customer base. The process to set up and convert prospective clients into paying customers takes time and could be a function a sales firm might be better equipped to handle.
Shipping
If you run an ecommerce business that involves sending out physical products to your customers, you might want to consider a shipping fulfillment service. Order fulfillment companies work with major delivery services like Fedex, UPS and USPS to coordinate logistics and ensure that the product is delivered to your customers on time.
Web design
Whether it’s for selling merchandise online or promoting the services offered at your brick-and-mortar storefront, having an up-to-date website is increasingly important for your business. But unless you have skills in website design, even website providers with premade templates can be overwhelming. Web developers can also offer ongoing technical support
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