The Pros and Cons of Outsourcing for Your Small Business

Outsourcing Options for Small Businesses

By: Pam Grundy

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When most people think of business outsourcing, they immediately imagine huge corporations shipping customer service and IT jobs overseas, but the truth is, outsourcing is becoming a great new way for small business owners to reduce costs, increase efficiency, and maximize profits.When you learn how to outsource projects and tasks that are not the central purpose of your small business, you free up your time and energy to focus on whatever it is that your specific business does best. Some examples of small business projects and tasks that can be economically and productively outsourced, are office work, writing and design work, marketing and web-based retail, public relations, specialist and expert consulting and help, and various management services.

Learning how to outsource projects that are not the main focus of your small business, can move many of your fixed expenses to variable expenses, and also control capital costs, reduce labor costs, increase efficiency, reduce risk, and enable you to start new projects quickly. The idea behind outsourcing is to take advantage of the most expert help available, without incurring the substantial costs associated with hiring and training a new employee.

Work that is the core of your small business identity should not in most cases be outsourced, but anything that has to be done, yet is temporary in nature or takes less than four days per week to complete, can probably be done better and more inexpensively by outsourcing it with the right firm or individual.
The following categories of work are often easily and productively outsourced by small businesses:

Expert Labor

You probably already use an accountant, but if you don’t, you might want to consider hiring one as your first outsourcing opportunity. Other professionals like attorneys, web designers and artists, marketing managers and PR firms, writers and editors, and computer technicians and programmers can all be hired through agencies that hook small business owners up with independent contractors or other specialized small businesses. Websites like Elance, Guru, and Odesk all match small business owners who have ongoing and temporary projects with professional freelancers. These sites charge no upfront fee to the small business. (Fees for the website are taken as a portion of the payment to the freelance professional.)

Public Relations Services

You may think you know how best to promote your business, but chances are you give promotion and public relations short shrift because you are too busy with the actual work you do to think much about it. Hooking up with the right PR firm can grow your business rapidly, and free up your time and energy so you can focus the customers you have, not the ones you want to get.

Virtual Assistants

A virtual assistant is an independent contractor that can do everything a secretary and a personal assistant can, and more. Virtual assistants perform clerical tasks, answer the phone, make calls, make travel and meeting arrangements, and even run personal errands. A virtual assistant can do almost anything you need done short of cleaning your house, and you don’t have to incur the costs of hiring an employee because the virtual assistant works as an independent contractor. You can find out more about virtual assistants at the International Virtual Assistant Association (IVAA).

PC Service & Repair

Many outsourcing brokers are beginning to specialize, and PC service is a hot new area for outsourcing that can save a small business both money and aggravation. One such service, ComputerRepair, connects small businesses across America with appropriate IT services, and claims to save their clients up to 50% over normal costs.

E-Commerce Solutions

Many small businesses avoid e-commerce for way too long out of fears over the cost and complexity, unnecessarily causing them to lose out on payment and marketing opportunities.

An online service like Easy Store Creator can set up an e-commerce platform that includes an online catalogue, secure online payment options, shopping cart software, tech support, and an opt-in newsletter all for $67 a month with a 25% discount for paying annually.
Yahoo Small Business will set up a very basic e-commerce online store (suitable for under 18,000 customers per year) for as little as $39.95 per month.

E-Mail Marketing

For as little as $30 a month, Microsoft List Builder will produce customized, permission-based e-mail marketing campaigns that can help to retain current customers, promote certain products or services, or find new customers.

Disadvantages to Outsourcing Work

Be realistic about your outsourcing plans and start small. Knowing how to outsource effectively can save a small business a lot of money, while at the same time free up energy for more profitable pursuits, but there are some disadvantages and pitfalls. A few of the drawbacks include:

Less Control
Outsourced projects are not directly under your personal managerial control, so you must make an effort to check in on the work to make sure it is proceeding as planned, and the quality is acceptable. Just as not every employee works out as well as you might have hoped, not every independent contractor who handles your outsourced project will deliver what you expect each and every time.

False Starts and Dead Ends
It may take several false starts and a few unsatisfactory experiences before you find the right outsourcing firms or individuals. Be prepared for some setbacks and a few false starts before finding the right person or firm.

Hidden Costs
These might include lay-off related expenses for employees replaced by outsourcing, or overtime expenses if your outsourcing plans create more work for the employees you do keep. Telecommuting expenses for virtual assistants should be considered when outsourcing clerical work.

Someone Has to Manage Your Outsourced Work
It doesn’t have to be you, but someone has to be in charge of keeping track of everything, especially if you have decided to outsource a number of projects. Be realistic about your time. If you won’t be able to track outsourced work yourself, assign the task to an employee you trust so your outsourced projects don’t get derailed.

Conclusion

In today’s competitive small business environment, working hard isn’t enough. Working smart and working hard is what you want, and outsourcing is a great way to get the best of all possible worlds at a price you can afford. It may take awhile to set up the outsourcing you need, but once you do, the financial rewards can be substantial.

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