A comprehensive guide on the what, when and how to outsource for your small business…

When Joanna Briggs left her corporate job to launch her own business, she knew from the beginning that there were certain tasks she didn’t want to handle. As the owner of a firm that helps companies to economise their practices through outsourcing, Briggs practiced what she preached from day one, hiring key skills from outside. Within months, her business revenues reached six figures.

Outsourcing for small businesses

Most small business owners have great talents but many think they can do it all, and this can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income.

Entrepreneurs have long seen outsourcing as a strategy reserved for big business, but technology has now made it more accessible for small businesses too. For some small companies, outsourcing has made a powerful impact on their growth, productivity and levels of profit.

More small businesses are outsourcing tasks because technology has advanced to the point of professionals being able to work from anywhere in the world with availability and accessibility. These tend to be extremely qualified professionals (who have decided to leave the corporate world) such as Marketing Directors, Virtual Assistants, Solicitors, Web Designers, Human Resources Consultants, Bookkeepers, PR Consultants, IT Specialists, and the list goes on. These freelancers come on board and save the small business owner the costs associated with payroll taxes and expenses such as health insurance, pensions etc. Not to mention office space limitation issues that growing a company faces.

It requires good decision making, but figuring out how to build your business with the help of outsourcing can offer increased efficiencies and economies of scale. Progressive entrepreneurs realise the power of outsourcing to handle functions of their business that are essential but non-core activities. Small businesses, augmented by a global pool of human resources, can compete directly with the biggest players in their space, and win.

When should you outsource non-core activities?

The correct time to outsource is different for each company. Some businesses have in-house staff to handle daily activities, but may need outside help to undertake new projects that don’t warrant another full-time employee. When you and your current employees are unable to manage the day-to-day business of your company and you have the desire to grow to the next stage, it may be time to consider outsourcing.

What should small businesses outsource?

It is likely that parts of your business are already outsourced, such as payroll administration or background / criminal checks for employment. As almost any task can be outsourced, and with so many qualified professionals leaving the corporate world to become self-employed, the possibilities are endless. However, these are the key business services we recommend you explore first:

1. Information technology (IT) – technology enables small businesses to scale so outsourcing your IT requirement can not only save you money, but also give you the flexibility and agility needed to grow your small business.
2. Accounts / Finance – payroll is the most commonly outsourced business service. Bookkeeping and accounting are also business critical services that are often more cost effective to outsource.
3. Marketing – for most small businesses it is not financially feasible to recruit a marketing professional with the necessary expertise, let alone a whole team. Outsourcing to freelancers or an agency is more affordable, gives you access to a range of specialist skills and delivers better results.
4. Logistics – handling fulfilment, warehousing and delivery internally results in people spending too much time managing stock and packaging, and not enough time spent on driving sales and growth. 3rd party providers can handle this for you.
5. Customer support – ensuring your customers are happy, can use your products or services, and are getting value for money is vital. Hiring an internal customer support team is not always viable. However, outsourcing to a customer support desk, helpdesk or, in the case of technology companies, IT service desk is. They work to industry standards like ITIL and the Service Desk Institute accreditation scheme, ensuring your customers get the service and support they deserve.

If you are in the early-stage of running a start up, you’ll be in the process of building a core team. This team will most likely consist of co-founders, product management / development, sales, and the ‘doers’; whoever makes a product or services a client. Chances are several people will be doing more than one job, and in some cases it might just be you and your smartphone.

These core roles will be your priority to get your business off the ground, focused on developing your product, building relationships and partnerships, and earning money. But for any organisation there are a whole host of other side tasks that need to be performed to support your core activities. Accounts, admin, marketing, IT management, all need to happen in the background to ensure that the business is run smoothly and has every chance of success.

How do you manage these additional jobs?

You might already have assumed some of these yourself, or perhaps other team members have taken on some of the responsibilities. But is this an effective use of your resources? Should you be doing the bookkeeping as well as winning that lucrative contract? Should your product development team also be trying to market the product?

Alternatively you could consider employing another team member. But before you do this you need to be certain that you have sufficient work for them, and that your investment will pay off. Staffing costs are the highest business cost of all, so this decision could seriously impact on your bottom line.

5 ways to fill the start up skills gap: outsourcing

Of course, there is an alternative – outsource your requirement. With this option you can buy in the skills of an experienced professional, freeing up your team’s time to concentrate on their core competencies, allowing you to budget efficiently by only paying for what you need, and saving you significant money that might otherwise be spent on staffing costs.

This means you can cut capital costs, keep flexibility, and improve business efficiency by acquiring each service on a monthly basis.

From my experience the following jobs are the ones I would outsource when starting up a new business:

1. Finance and Accounts

From bookkeeping, payroll and tax returns, all the way through to financial strategy; these jobs can be outsourced to an expert who can either save you time by managing day-to-day accounting and regulatory compliance, or proactively drive your business forward with financial projections, cash forecasts, operating budgets, financial planning etc. For those start ups in a high growth mode a Chief Financial Officer to oversee an accounting team, could be a good outsourcing option. Companies with a more modest projected turnover might want the services of an accountant for specific jobs or projects, such as year end, audit preparation etc., and manage their invoicing and bookkeeping internally.

2. Marketing

Sales and marketing tend to be lumped together. But while they are intrinsically linked, this doesn’t mean your sales team has the skills to perform a marketing function. Marketing is such a large area of expertise that even organisations with in-house marketing departments will often outsource parts of this remit to other agencies or freelancers. For a start up, the cost of employing an experienced marketing manager, compounded with the additional costs involved in creating marketing assets, can make it prohibitively expensive to do in-house.

3. Human Resources

Managing your employees, from recruitment right through to employee policies, compliance, and even grievances, takes your core team, away from their role. Although you may have senior members of staff managing other employees, they should be focussed on enabling their team to perform at their best – not dealing with employment issues. In the absence of an HR Director this role tends to fall to a Co-Founder who will be on a very steep learning curve acquiring knowledge in employment law, best practice, contracts etc. In the infancy of a new business, outsourcing this function is a much better alternative.

4. IT Support

One of the key benefits of outsourcing your IT is that you can outsource as much, or as little, as you need. This could involve management of your entire IT department, or just a single component such as data storage or service desk. For start ups this is a very scalable solution, allowing you to outsource more or less in line with the growth of your business. IT outsourcing also increases your core team’s productivity, not just by allowing them to focus on their core competencies, but also by reducing downtime because of system errors or IT outages.

5. Office admin

Cloud services enable start ups and established businesses to reduce costs and increase flexibility in their day-to-day operations. All of the jobs above benefit from the cloud, whether it’s the ability to share files and documents using cloud storage, or the use of cloud-based software such as project management and accountancy systems. Office admin is no different and for the start up has clear advantages. Whether you require diary services, data input, transcription, a telephone answering service, research or letter writing; all of this can be outsourced without having to provide a desk or a computer to the provider.

Perhaps the key advantages to the start up owner of the above outsource options is their flexibility. You might start off with just a few small tasks such as IT activities (e.g. network connectivity, data back up and software applications) in the early days of your start up. Further down the line when your company has proven itself and has reached a certain growth, you can outsource additional services like infrastructure management or service desk.

Either way it’s important not to ignore these jobs while focussing on your core business activity in the early days. They may not be directly generating revenue, but they are all contributing towards making your business more efficient, productive and profitable.

If your in-house resources are stretched to the limit you may be considering the benefits of outsourcing IT. Over the years I’ve talked to many customers about the challenges they face in business, and the benefits they derive from outsourcing their IT to a service provider. The list is long and varied but boils down to the following key benefits that really deliver ROI. 

1: Cost and budgeting

First and foremost has to be cost. Although outsourcing IT will be viewed by your CFO as an additional operational cost, consider what the cost would be if you were to effectively service your IT in-house. Depending on the size of your organisation, and the demands on your IT department, this might involve paying the salaries of additional members of staff as well as on-going internal infrastructure costs.

Furthermore, you will need to manage and invest in your staff’s training in an area that is moving at a rapid pace. Keeping up with technology is a huge challenge for many organisations as they try to juggle the priorities of other areas of the business alongside technological developments. The advantage of using a service provider is that you do not need to invest in their CPD, update their system software and IT infrastructure, or any other associated costs.

As an IT manager you may also question whether your time is well spent resolving minor technical issues; is this a productive and cost efficient use of your time, or would it be better if you spent your time driving the business forward in other ways? In smaller organisations you may also be juggling different roles, in which case you must ask, “where is your time best spent?”

Outsourcing your IT also gives you much tighter control over your IT budget: inclusive monthly payments with no up-front costs make managing budgets that much easier through predictable costs.

Find out how much outsourcing your IT service desk could cost. Get a high level quote here

2: Freedom to focus on your core competencies

Whether you’re a legal firm, an education institution, a financial company or a retailer, your core business is not IT. Therefore why spend valuable time and resources on IT when you could be investing this in growing the business and delivering your core offering?

Of course, most organisations are heavily reliant on their IT to do just this, focus on their business. This means that when issues occur it has to be a priority to put them right, 24/7. The cost implications of doing this effectively in-house are significant, especially if your organisation has a remote workforce, or encourages flexible working; operates outside of conventional working hours, or across different time-zones.

IT managed service desks are staffed 24/7/365 by fully trained, experienced, qualified, certified, and culture-trained engineers. With a single point of contact, to all intents and purposes the service provider becomes an extension of your existing team.

3: Immediate expert support

Not only does outsourcing your IT provide you with expert support for minor incidents and critical failures, but you also benefit from the on-going support of a team of experts to advise you on additional IT solutions. For example, if you need to support an increasingly mobile workforce, or install a new telephone system, your service provider will have extensive knowledge of a wide range of available technologies, as well as a great understanding of your organisation’s day-to-day, and long-term requirements.

Even if you do have a small IT team, you can call on the knowledge of a more specialist team who are already embedded in your organisation, complementing the expertise you have in-house.

4: Keeping up-to-date

I’ve already identified “keeping up with technology” as being one of the major challenges businesses face. Even ensuring that you are using the latest software upgrade, and that it doesn’t cause any conflicts, can be a burden on an already time poor business or IT manager. Factor in keeping up with new developments and understanding what products and new technologies can benefit your organisation, and it’s no surprise that many businesses struggle to make sense of this ever-changing landscape.

Here too the IT support provider can add value, helping you negotiate your way through the latest technological developments. Furthermore with partnerships and accreditations with leading technology suppliers, your business will always be up-to-date.

5: Agility, flexibility and scalability

One of the most common problems I come across in businesses today is IT legacy. This can inhibit an organisation’s ability to grow, move into new markets or change operational systems without a significant investment in IT infrastructure. By outsourcing some or all of your IT requirements you can reduce the need for such a substantial overhaul, by using the IT supplier’s instead.

This is an extremely agile solution allowing you to scale up or scale down depending on the level of service you require. This allows your organisation to be truly responsive to change, whether that’s as a result of your business strategy or in response to external forces such as market forces.

If you would like to explore IT outsourcing in more detail with a member of our team, please get in touch.