Outsourcing is a general term for obtaining goods or services from an “outside” supplier, company, or individual. This could mean outsourcing your labor to a staffing company, or hiring a company to do your payroll/accounting for you. These suppliers are providing products and services on your behalf, except they are the ones doing the work. Outsourcing can be a great tool and strategy for a growing business.
I personally am a huge fan of outsourcing products and services to outside companies. I use tons of companies for various outsourcing projects that helps free up my time so I can focus on my business.
Below, I take a deep dive into why you may want to consider outsourcing:
Outsourcing saves you time. While in general it does cost money outsource, it can save you time and hassle to learning how to do it yourself. Hiring the right people or the right company gives you the freedom to continue growing your business and doing what you’re good at. Peace of mind is truly priceless.
2. TRANSFER OF RISK.
Let’s say you hire a payroll specialist company like ADP or Paychex to handle all of your payroll for you and your employees. They ensure your company stays compliant with all the tax payments, tax liabilities, filing your monthly/quarterly/yearly taxes, etc. They handle all of this for you, they are experts at what they do. The great part is that the payroll company assumes all the risk. If THEY make a mistake (which is very rare), you aren’t liable for it, they are. If they file the incorrect form for example, they would be completely liable. The government recognizes that the payroll company is working on your behalf and they will work with the payroll company to ensure your business stays compliant, another great reason to Outsource. When you outsource, instead of you taking all the risk, you are actually transferring your risk onto the 3rd-party company. It's a smart business move which makes you "less liable" if an issue were to arise. You can hold the 3rd-party company accountable.
3. IMPROVE THE QUALITY OF YOUR BUSINESS.
There are many facets of a company, such as Bookkeeping, Accounting, HR, Sales, Marketing, Secretary, Operations, etc etc. As an entrepreneur, you need to be spending your precious time working ON your business and not IN your business on minuscule admin tasks.
Hiring a professional company to take care of various simple tasks will help your business to be more professional and refined. For instance, hiring a virtual receptionist to answer your phone calls 24/7 can be truly valuable. Not only do they answer the phone at anytime (which would be a relief for many customers to hear a real voice), the virtual receptionists are professionals at exactly that — answering the phone with enthusiasm and professionalism. No one has to know that you hired a company to answer the phone. At the end of the day, a customer just wants to speak to a live person and make sure their needs are being taken care of. Hire professionals to help you take care of the different facets of your company. This will open up more time for you, the entrepreneur, to get the real business done.
4. REDUCES STRESS.
As an entrepreneur, stress comes from many different places — keeping your employees happy, making sure the bills are paid, satisfying your customers, beating your competitors, etc. Being an entrepreneur can bring a unique type of stress. A stress in which we feel responsible for the individuals who work with us and work for us....a stress in which we feel that we must deliver the results to our customers as promised. It’s different because we are responsible and in control. If something goes wrong, we blame ourselves.
Outsourcing can certainly help to reduce the stress. I remember how relieved I felt when we hired our first payroll specialist. They handled all the hiring paperwork, the tax forms, the paychecks/paystubs, direct deposit payments, paid our taxes for us, filed our quarterly/annual forms to the government, etc. All I had to do was approve the hours that our employees worked and the payroll company handled every other aspect. It was nice to outsource this bi-weekly task and have them handle it all. I no longer had to worry about making a mistake or pulling my hair out because I didn't know the difference between an exempt and nonexempt employee. Trust me, that in itself is worth paying for.
5. WE CAN’T DO IT ALL.
Being the jack-of-all-trades is not sustainable for long-term growth. Naturally, when you start your business you will be the “go-to” person for everything. You wear all of the hats (HR, Customer Service, Sales, Operations, Website Design) — you do everything yourself. As your business grows and you begin to generate sales revenue, now is a good time to start thinking about outsourcing and hiring professionals to take care of some of these burdens for you.
|These days, you can hire anyone to do just about anything your business needs.
Start small. If you know you’re not good at designing your website, hire a professional. If you know you don’t like doing the taxes, hire a professional. Don’t assume hiring a company will cost thousands of dollars. That’s not always the case, however do your research and due diligence with every company/individual. Also, understand exactly what you might need. Having determined what you need will give the professionals clarity and flexibility, and therefore you’ll be able to negotiate terms, pricing, etc on their products and services.
Keep that in mind, while hiring companies/professionals obviously costs money, it doesn’t have to cost a fortune. Sometimes peace of mind is priceless.
As an entrepreneur, it’s critical to think outside the box and get creative. Remember, anything is negotiable. Ask questions and ask for references from your vendor of choice.