outsourcingI own a small accounting firm and I’d like to grow my business. How can outsourcing help small businesses?
Outsourcing is just a way you’re working, not a benefit. Your question is, what problems can you solve for business owners/managers?
I tend to think of financial management as having four tiers: strategy (the CFO role), direction (a financial director or senior manager), bookkeeping (where at least some training/qualification is needed) and admin.
So in your shoes, I’d be asking, which tier or tiers do I want to deliver? Your customer is the next highest role, and so what problems you should tackle will vary with your decision. If your chosen market is small businesses, the distinction is still useful, but you’re likely to find that some of those tiers are hard to map. That’s a challenge, but also an opportunity, because you may be able to bring in a level of capability above, or supporting, existing staff.
Wherever you’ve decided to focus, that’s where you dig deep. Find out what keeps your customers awake at night, work out how you can help, and find ways to tell your story that make some aspect of outsourcing (distance, objectivity, professional accountability, breadth of regular experience etc) a significant reason why you can make life better.
One last tip. In general, outsourcing is a trade of risk. It’s financially sustainable where each risk has moved towards the party who can handle it better - that’s the win/win you’re usually seeking. So beware the sales instinct (“if I move everything off-site, I’ll keep that customer forever”) and find ways to build your service around the value and profit-maximising approach of optimising the location of each responsibility and its risks.
When companies develop a clear plan and strategy for outsourcing, it can help the company make better decisions and maximize the relationships with its outsourcing partners. There is no doubt that outsourcing works – a study from IBM Research showed that businesses that outsource have lower expenses and higher operating income than business that don’t outsource.
However, outsourcing does more than simply lower expenses for companies; it provides numerous other benefits as well. Here are the 5 biggest reasons companies choose to outsource:
Limited staffing resources or experience: Often companies don’t have the staffing support in place to have multiple employees focus solely on one project. If existing resources are overextended it may become necessary to focus on the daily operational duties.
Your staff also may not have the specific experience or training needed to effectively tackle the project at hand. If the project requires specialized experience, outsourcing may be optimal. An example of this could be hiring an independent accountant to handle the bookkeeping off-site.
Increased efficiency: Handing off a particular project to an agency or contractor with the expertise to deliver on that project quickly and efficiently will lead to increased productivity. Handling the same project yourself could involve spending weeks to months hiring and training new employees before you can even get started on the project.
Lower costs: Companies that don’t outsource tend to have higher expenses for research, marketing, and development. As competition grows and budgets become tight, it can be difficult to find the extra resources to fund projects that require specialized staff.
Freelance contractors offer different pricing structures based on their level of services and experience. Although it may take some upfront effort to obtain price quotes and determine who the best fit is, it can be cost effective in the long run.
Objectivity: Outsourcing can bring in individuals that have a level of objectivity that is not present in those people closest to the business. This can be a huge asset when it comes to the project outcome.
Focus: According to this article in Entrepreneur, managing multiple projects at once can result in a 40 percent drop in productivity. Outsourcing can reduce distractions and allow companies to focus on their core competencies. By freeing up time-consuming tasks, management is able to focus on the activities that are essential to the long-term growth of the company.
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