February 22, 2024

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Business Life

5 Functions Your Small Business Should Outsource

A young businessperson does paperwork in coffee shop and checks their phone.

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Small businesses can save money and free up internal resources by outsourcing certain business functions. Here are five main functions to consider — and a few extra ideas you may want to think about.

Ask any small business owner to share their most significant business challenge, and the answer will likely be along the lines of, “I don’t have enough time to [insert a critical business task].”

Small business owners are masters at using every spare minute of their time. But they aren’t experts at knowing when to shut off their minds, shut down their laptops, or let go of tasks that don’t need their personal touch or could benefit from an expert’s touch.

Over and over, business owners get the same advice to tackle their challenges. Experts say the key lies in doing these two things: delegating and outsourcing. They’re essentially two ways small business owners can unload tasks from their to-do lists while ensuring they still get done.

Delegating is usually the simpler of the two. It’s not too challenging to find someone to take over tasks holding the business owner back. The hesitation occurs when a business owner doesn’t love letting go of certain business aspects. However, most owners will admit they aren’t experts in every part of their business.

Outsourcing is a bit more complicated. The term has myriad connotations that stem from industry standards, previous experience, and company messaging. While outsourcing is certainly not a bad thing, it’s vital to ensure you outsource the right functions for your business to the right people, companies, or organizations. Specifically, consider activities easily outsourced by small businesses and easily handled by others.

What small business functions can be outsourced?

In short, functions that can — and should — be outsourced require a specific skill set that can be found outside the company and are not the primary function of the business.

For instance, if your small business offers marketing services, you may not want to outsource your marketing, although you may consider supplementing it. But if you are an accounting firm, outsourcing your marketing functions may prove beneficial and help your business grow.

Here are a few examples of outsourced business services to consider.

1. Accounting and bookkeeping

Accounting is a common function small businesses choose to outsource. If you’re not a financial expert, it’s tough to become one while running a business. And honestly, do you really want to do your finances? There are processes, compliance standards, tax payments and implications, and numbers to crunch to keep the business running smoothly for any business.

There is also a lot of room for costly human error if the person dealing with the business finances rushes through the process, isn’t knowledgeable, or lacks the necessary resources to get the job done. Outsourcing accounting and bookkeeping increases efficiency and will save money in the long term.

2. Administrative work

Often business owners are big thinkers. Therefore, the smaller administrative tasks required to make the big ideas come to life are not the owner’s strength. Outsourcing these functions to a virtual assistant (VA) is a great option, and it is becoming a more common practice. Due to the more recent increase in demand for VAs, enabled by technology and platforms to hire these workers, many have a focused skillset and are great at what they do.

VAs will handle anything from scheduling appointments to social media posts, and they charge anywhere from $10/hour to $75/hour based on the individual’s skills and responsibilities. Investing in a virtual assistant can be the best way to keep a business organized and the owner focused.

3. Sales

Setting up and executing an effective sales process that includes lead generation, sales funnels, and closing deals requires a unique skill set. Sales firms or seasoned professionals are experts at making effective sales calls and closing deals. If your business doesn’t have the personnel or expertise to create a sales workflow and close deals, outsourcing this function will put these tasks into the hands of skilled professionals.

4. Marketing

Word-of-mouth is usually the first approach to marketing a small business. However, the results will slow down at some point, which is the time to focus on marketing for growth. Outsourcing marketing for a small business can include hiring an outside firm. This can be the best way to create and implement a professional, strategic marketing plan. Agencies can manage all aspects — from concept to design to execution and measurement.

These firms are also great for offering an outsider’s perspective and conjuring up new ideas or approaches based on their expertise and knowledge of what works and what doesn’t.

5. IT and systems management

IT is such a specialized function that it’s one of the most outsourced aspects of a business. Since IT and systems management requires a wealth of knowledge, including integration, security, and troubleshooting, most providers will offer a customized approach to assisting your business.

You can consider small business IT outsourcing and hand over all of your management to a managed service provider, or you can work with a company with on-demand services that will assist with ongoing maintenance or urgent issues.

6. Other services

Depending on the type of business and services, other functions are commonly and successfully outsourced. The depth and breadth of what you need will depend on your business, your aspiration to scale, and the availability of internal resources.

These functions include:

  • Manufacturing
  • Shipping
  • Logistics
  • Fulfillment
  • Customer service
  • Human resources

Should you outsource certain functions of your small business?

If you’re considering outsourcing, then you’re likely overwhelmed, stuck, or seeking growth. Outsourcing can create efficiency, cost savings, and free up your time, but you must be ready for the commitment, and you must do it the right way.

When it’s time to start outsourcing

There are a few key indicators that will help you decide if you are ready to outsource. However, the most important thing to remember is honesty. Be honest with yourself about your business and your goals as you make decisions.

1. Your business is growing, and you cannot handle the work

While your business may be growing at a pace that requires additional support, you may not be ready to hire a full-time employee to handle a specific function. Instead of recruiting, hiring, and onboarding full-time employees, outsourcing may be a way to assist with growth.

Outsourcing could be a great solution, which will avoid incurring the expenses of a full-time employee and the time it takes to onboard. If you hire a freelancer, contractor, or firm, chances are the individual or team is highly skilled and can get to work immediately.

2. You need to scale based on seasonal boosts

If you operate a business with predictable ups and downs, the extra work during the busier times may be more than your team can handle. Therefore, finding an outsourcing partner who can help you scale up or down based on activity enables you to maintain productivity and avoid hiring and firing.

3. You lack the expertise

Know your strengths, challenges, and limitations. Be okay with investing in a professional to tackle tasks much more efficiently and effectively than you could independently. You will reduce the hours you spend trying to “figure it out” and allocate them to doing what you do best.

4. You just do not have enough time

As mentioned, business owners often run out of time to get everything done, and they don’t always get to complete the high-priority tasks that generate revenue or create growth. So if you observe things falling through the cracks or missed opportunities, this is an optimal time to outsource some business functions and refocus.

When outsourcing may not be the right option

While outsourcing can absolutely benefit small businesses and provide much-needed support, there are times when outsourcing may not be the best course of action.

1. Your budget is tight

If you genuinely cannot afford to outsource, then it’s not the right time. Some functions cost more, and some cost less, but overall, it’s an investment. If you think outsourcing is the best option, but you cannot justify the expense with the return right now, keep it on your list and revisit when the time is right.

2. You lack internal resources

While many outsourcing options are close to turnkey, there will still be some internal management required. If you don’t have the internal resources to oversee the outsourced function or provide necessary direction, then your efforts may fall flat.

3. A consultant would be a better option

One question to ask is, “Can a consultant help with this issue?” In other words, is this a one-time problem that can be solved by hiring someone on a one-off basis? While still technically considered outsourcing, it is a more temporary solution and may just require a consultant for a short time to put things in order and help you move forward.

4. You have security concerns

If your business deals with highly sensitive information, be careful granting access to this information. If specific security clearances or other legal issues are involved, you may want to avoid outsourcing and instead hire someone to work in-house. By hiring an employee, you can maintain more control and transparency.

Outsourcing leads to efficiency

In general, outsourcing allows you to get more done and trust essential tasks and processes to professionals without growing your full-time team. This keeps costs under control, increases efficiency, and frees up resources for you and your team to focus on what you enjoy.