The process of subcontracting a firm’s business tasks to third parties and outside sources, while taking advantage of benefits like getting high quality and creativity for a relatively low cost, otherwise known as outsourcing is one that several entrepreneurs have come to know and rely on. As opposed to attempting every business task yourself (which would not go well) or employing full time staff for every task that needs to be done (which would put unnecessary strain on your wallet), outsourcing brings all the creativity and quality of experts at a fraction of the cost while gifting you with more time to handle tasks that require your attention.
Surprisingly, several young entrepreneurs still don’t realize the advantages of outsourcing and as a result overstretch themselves while attempting to do too many things at once. Though outsourcing may be difficult at first, it’s in your best interest since the benefits of outsourcing are visible from both a financial and human capacity point of view. Important functions like payroll, accounting and transcription services are commonly outsourced to the relevant firms, so entrepreneurs and their staff can focus on the jobs they were hired to do. Businesses outsource for a number of reasons whether they are short on human resources, budget restrictions, economic factors, etc. Outsourcing can provide many benefits for entrepreneurs and this article touches on 7 of the most important benefits of outsourcing for entrepreneurs.
- Save money and human capital: Outsourcing is oftentimes more cost-intensive than hiring a full-time employee to perform the work. Even though you’re familiar with the task in question, doing it all by yourself will increase expenses fast. Barring all that, a business (especially if it’s a startup) will probably not have the funds to hire a full-time employee to do those tasks, but could benefit from outsourcing to a contractor who specializes in those areas. It is easier and more cost-effective to outsource to a contractor with the specific skill set required for the particular task, as opposed to hiring full-time staff for those roles. In particular, if your startup has a short-term project that needs to be done, it is much cheaper to hire an outside company to handle the project.
- Cut down on the cost of labor: Hiring and training staff for short-term or peripheral projects can be very expensive and detrimental to a startup in the long run. If you make a habit of always hiring and training new staff for temporary positions, at the end of the day the combined cost of so many temporary hires and trainings will be huge. In addition, temporary employees don’t always live up to expectations, which will make your business lose even more money. One of the benefits of outsourcing is that it lets you focus your human resources where you need them most.
- Make other investments: Another benefit of outsourcing is that entrepreneurs can use the money saved to invest in other aspects of their business venture. Any entrepreneur or startup that works with investors will understand the benefits of this decision-making. Most investors will be encouraged when they observe that the main focus of your startup is on revenue-generating activities. Benefit from outsourcing certain business processes, so you can effectively spend that time and energy on training and leading your team to grow the business.
- Get tasks done by a professional: When you outsource to a contractor or company, your work gets handed over to an expert in the field in question as opposed to being handled by someone who only has basic knowledge or possesses scant skills for the job. The work is thus done better and finished quicker because skill saves time.
- Focus on business: Entrepreneurs have limited time and money and as such, need to constantly think about their end business goals. Instead of trying to handle too much at the same time, while focusing completely on no single task, a benefit of outsourcing is that it allows you as a business entrepreneur to move focus away from peripheral activities and pay more attention to serving your customers and your staff. It also helps you prioritize business activities with results that generate revenue and meet your business goals. By having your team focus on what they’re good at and leaving the skill-driven, non-revenue generating tasks to an outside provider, your business can revitalize its focus so everyone is working towards a common goal.
- Level up against competition: Since most small firms and startups can’t afford to match the in-house support services of larger companies, outsourcing has the added benefit of helping them act “big” by giving them access to the same efficiency and expertise that larger companies enjoy.