In today’s competitive business landscape, small businesses and startups face numerous challenges, with labor costs being one of the largest expenses. However, have you ever considered outsourcing your business functions? Outsourcing not only helps reduce costs but also provides flexibility, saves time, and allows you to work with top experts in the industry, all without the hefty price tag. In this beginner’s guide, we will explore the advantages of outsourcing and highlight four key areas where outsourcing can benefit your business.
The True Cost of an Employee
When hiring an employee, you not only have to consider their salary but also additional expenses such as employee benefits, unemployment tax, and workers’ compensation. In fact, the true cost of an employee is estimated to be 25-40% more than their base salary. This realization has led to a growing reliance on outsourcing among small businesses and startups. In 2019, approximately a third of small businesses already outsourced some business functions, and 52% were planning to do so. Astonishingly, in 2021, the number of small businesses planning to outsource has skyrocketed to 80%.
Identifying Functions Ideal for Outsourcing
While it’s essential to maintain control over your competitive advantage, there are certain core functions that every company must handle. These functions include accounting, legal, marketing, cybersecurity, shipping and fulfillment, and data entry. By outsourcing these non-core functions, you can focus on what truly sets your business apart while leaving the rest to industry experts.
According to Gregg Landers, director of growth management at CBIZ MHM, there are two categories of tasks that are ideal for outsourcing. Firstly, tasks that require a high degree of skill or specialized knowledge, and secondly, highly repetitive tasks. By outsourcing these tasks, you can streamline your operations, reduce costs, and achieve better results.
1. IT Training and Certification
The COVID-19 pandemic highlighted the value of a competent IT department, especially with remote work becoming the norm for many businesses. However, developing and maintaining an in-house IT team can be costly and time-consuming. According to a survey of learning development professionals, it takes an average of 132 hours to develop a single hour of online learning content. This is where outsourcing IT training and certification becomes a cost-effective solution.
Companies like IBEX Business Experts offer third-party training and certification programs that reduce costs and ensure your team is consistently trained and unified. Whether you choose instructor-led courses or virtual learning, outsourcing your IT training allows your team to work at their own pace while acquiring the necessary skills to support your business effectively.
2. Business Accounting
To stay in business, every business needs the assistance of a bookkeeper, accountant, or both. Managing financial records, tracking expenses, running payroll, filing reports, and handling taxes are crucial tasks that require expertise. However, hiring a full-time in-house accountant can be expensive and may not be cost-effective for most small businesses.
Outsourcing your accounting functions to software platforms like Gusto for payroll or partnering with an accounting firm can help you save money and ensure accurate financial management. By leveraging the expertise of licensed CPAs and accounting professionals, you can focus on growing your business while leaving the complexities of financial management in capable hands.
3. Outbound Sales
For businesses aiming for rapid growth, scaling the sales team becomes a priority. However, developing a repeatable sales process, finding the right talent, and training them effectively can be challenging and time-consuming. Additionally, hiring aggressively in sales carries the risk of high turnover rates, which can be detrimental to your business.
Outsourcing certain sales roles, such as outbound sales or business development, can provide a steady influx of new leads while freeing up your in-house representatives to focus on high-value work. Third-party companies specializing in outbound sales can employ tactics like cold calling, attending trade shows, and door-to-door selling to generate leads for your business. This approach allows your in-house sales team, who possess in-depth knowledge of your company, to nurture relationships and close deals more effectively.
Marketing is a highly specialized and ever-changing industry that plays a vital role in the success of any business. However, developing an in-house marketing team capable of handling all aspects of marketing can be challenging and costly. Instead, outsourcing specific marketing functions to agencies or firms specializing in those areas can yield better results.
The type of marketing you invest in will depend on your business, budget, and target market. Whether it’s pay-per-click ads, social media, influencer marketing, inbound marketing, or traditional media channels, outsourcing to experts in those fields ensures you have the right strategies in place. By adapting your marketing tactics based on results and working with specialized firms, you can maximize the effectiveness of your marketing efforts without the need for a full-time in-house marketing team.
Choosing the Right Areas to Outsource
As your business grows, it’s natural to consider expanding your team to accomplish more. However, outsourcing non-core business functions that aren’t your competitive advantage is often a better choice. By doing so, you gain access to top professionals in the industry without the burden of paying their entire annual salary. This allows you to invest in talent that can help you grow your business faster, while freeing up your resources to focus on what truly sets your business apart.
In conclusion, outsourcing business functions offers small businesses and startups the opportunity to reduce costs, save time, and work with industry experts. By identifying the right areas to outsource, such as IT training and certification, business accounting, outbound sales, and marketing, you can streamline your operations and achieve better results. Embrace the power of outsourcing and propel your business towards success.