Entrepreneurs need to wear many hats - taking on multiple roles - when starting their own business.
Finding the right balance and having enough time to handle all of the tasks required can be daunting. Everything feels important and critical, and usually at the same time.
That is why the smart business owner looks to build strategic partnerships with other business experts to lighten the load. Tapping into expertise and insights from other companies to provide needed services is essential to accelerating growth and maximizing profits.
To build a better business by leveraging outsourcing and support services, entrepreneurs need to know what services to outsource, when to outsource, and how to pick the best partners for their business needs. Doing so helps new business owners save time and money.
When many people think about the phrase “outsourcing,” they recall stories about large corporations moving manufacturing, IT, and other jobs overseas to countries with inexpensive labor. However, the concept has evolved. In the small business arena, outsourcing refers to the practice of using outside firms to handle work normally performed within a company.
Outsourcing has a significant benefit for companies looking to leverage highly skilled expertise via external companies. And, with the technology advancements, companies today have the ability to connect from any corner of the globe, which provides insights and knowledge from virtually anywhere.
Outsourcing has several distinct advantages.
- Labor savings. Outsourcing helps reduce the costs of labor (and the associated employee benefits and taxes). Hiring for short-term projects or depending on unreliable temporary help can be unproductive and, if it does not work out, costly.
- Lower operational costs. Budget is likely top of mind for many small business owners. There is a lot of pressure to spend money in lots of areas. By reducing the pressure on hiring, you are able to spend money elsewhere.
- Strategic focus. Small business owners need to focus their energies on the most strategic tasks. Whether it is setting a long-range vision, doing research, leading the sales team, or driving brand awareness, there are more specific tasks than rudimentary business processes where executive entrepreneurs can spend their hours.
- Productivity. Outsourcing allows staff to focus on critical tasks that will drive profits. It also reduces the amount of staff time spent trying to learn skills that may not come naturally.
- Reduced infrastructure. Outsourcing allows for functions that would normally be considered as fixed costs to be classified as variable costs, providing greater budgetary flexibility. This can free up capital that can be used in other areas of the business. Pumping more capital into your business, especially at its launch, can make a company more attractive to investors too.
- Quality. Outsourcing gives use access to skills that otherwise would be unobtainable from internal resources. When selecting the right partner, your company gets proven success and expertise from professionals with a commitment to the type of work they are doing for you.
- Agility. With services that grow as your company does, you can scale accordingly with outsourcing partners that are responsive to your growing needs. Projects that need to be started right away do not need to wait until staff are hired and trained.
- Standardization. Using proven best practices, outsourcing partners can ensure that your business is using the right systems, tools, and reporting to ensure you are competing on a level playing field.
- Risk reduction. With experts focusing on core functions, you reduce the risk of noncompliance with labor and tax laws, regulations, or other compliance issues. Many outsourcing providers assume the risk and manage it for you.
What and When to Outsource
Timing is essential when it comes to outsourcing. So is planning. Entrepreneurs need to take the time to consider the myriad skills needed to get a company off the ground and working productively on an ongoing basis.
This self-assessment is important, providing you with a clear-eyed view of your strengths and weaknesses. Do the same for your team (if there is one).
You want to focus on the tasks at which you excel, those that grow the business, and use your unique skill set.
There are, broadly, three sets of skills that are outsourced, including:
- Highly skilled or executive. These include C-suite level jobs like a CEO or CFO. You may not be big enough to have a chief financial officer, but it might make sense to have someone with senior-level executive experience come in a few days a month and help with financial strategy and review your books.
- Highly repetitive. Inventory management, data entry, and accounts payable work is pretty routinized. While it can be done by someone on staff, that person’s skills may be better suited for more complex work.
- Specialized knowledge. You may be in a niche industry or have a particular project that requires a particular skill set that your team does not have. IT support for a specific software or platform is one such example.
Among the common outsourced skills are:
- Legal help. Whether it is setting up your business structure, reviewing legal documents, or answering legal questions, external legal help makes sense for a small business.
- Graphic design, advertising, and marketing. Hiring internal staff to design materials, create ad campaigns, buy time and develop marketing strategies are niche skill sets that an agency or sole proprietor can often provide.
- Bookkeeping or accounting. Reconciling accounts payable and accounts receivable, ensuring bills are paid and maintaining the basic business financial documents is time-consuming and takes specialized skill. In addition, tax forms need to be completed and records kept well to ensure the company complies with state, federal, and local tax laws.
- IT support and computer networking. You might be able to set up a home computer and printer, but when a business has multiple computer systems, servers, platforms, and software packages, there is a lot to maintain. Outside professionals can make sure the work is done properly and, when trouble arises, get devices and systems up and running again.
- Administrative assistance. Virtual assistants are becoming more common, helping busy entrepreneurs keep track of the many tasks, schedules, appointments, paperwork, and other secretarial functions that are essential to maintaining productivity.
- Website management and content marketing. Building a website might look easy but ensuring that a site works on multiple platforms and devices, has the right content to drive search engine results, and represents your business properly can be time-consuming and difficult.
- Credit card processing. Making sure that payments are processed and managed properly requires technical expertise and security that can be cost prohibitive for small business owners.
- Employee payroll. Keeping employee compensation accurate means managing deductions, payroll and Social Security taxes, court-mandated garnishments, and compliance with tax regulations. Making mistakes with payroll can trigger Internal Revenue Service audits and disgruntled workers.
- Employee benefits administration. Selecting and managing employee benefits is important for keeping workers satisfied, claims managed, and employer costs low.
- Insurance selection and management. Finding the right insurance options for your company, managing premium payments, and filing claims often requires outside expertise.
Many of these services do not warrant hiring another full-time employee, making outsourcing the smart choice. You may not need all of these outsourced experts at the launch of your business, but many are mission critical before you open your doors.
Take credit card processing as an example. To make it easier for customers to pay for your services, many small businesses accept plastic. You need an administrator to accept and process payments. While you could research the systems and technology needed, it is often a better use of your time and money to bring in an external expert to create and implement the right solution for you.
When your employees are feeling overwhelmed and cannot take on additional day-to-day responsibilities, outsourcing is a good solution.
The Benetrends Option
At Benetrends, our business is all about helping entrepreneurs find success. We pioneered models that help small business owners use their retirement funds to fuel new business opportunities.
Benetrends also helps owners by providing business financial services through partnerships that help them be strategic, save money and time, and drive success. These support services are designed specifically to give small businesses clear advantages with professional staff dedicated to helping them succeed. Our business financial services partnerships include:
- Credit Card Processing. Companies accept all major cards, including Discover, MasterCard, Visa and American Express. For one low monthly fee, your business can accept credit cards and checks from customers, track and report on payments, and process payments using secure, safe technology. Benetrends has negotiated rates with TSYS Payment Solutions and has reporting tools to let you track transactions from authorization to final payment.
- Business Insurance. You want to protect the investment in your business. Benetrends helps companies select and administer insurance plans that are essential for a small business. Our insurance programs make sure you are neither over insured or underinsured at an affordable monthly premium. Our insurance products include business owners’ insurance, workers’ compensation, individual health insurance, and property and liability coverage.
- Retirement plans. We work with businesses to design retirement plans that are attractive to employees and compliant with federal regulations. We will work with you to administer plans, communicate to employees and report on plan performance. We have helped entrepreneurs with 401(k) plans, Roth 401(k)s, profit-sharing plans, and defined benefit plans.
- Payroll management. Our partnership with ADP gives companies preferred partner pricing, access to online tools and resources, cash flow management, and payroll solutions such as direct deposit and pay cards. With Benetrends and ADP, companies can reduce administrative costs and minimize compliance issues.
The value of outsourcing is why many entrepreneurs choose Benetrends. To learn more about how Benetrends can help you save money and time and grow your business, schedule a consultation today.