In a small
business, unfortunately, you can’t do everything yourself and still plan to
grow. If you’re not in a position to hire employees to share the work, chances
are that sooner or later you’ll consider outsourcing.
Companies
of all sizes can benefit from sending certain job functions outside instead of
dealing with them in house. Some of those tasks may be infrequent or require
special equipment; others may fall into the category of ongoing maintenance,
such as accounts payable and receivable or janitorial services.
Regardless
of the type of company you have—service, retail or manufacturing—not every
activity involved in operating your business requires your expertise. In fact,
it makes sense to outsource any critical activity that another individual or
company on the outside can do better than you. As the company owner, you then
free up your time and talent for the more profitable aspects of running your
business.
Bookkeeping
is an example of a job function for which a small business may not require a
full-time employee. Unless you yourself have an accounting background, this is
an activity that you may not enjoy and consequently procrastinate on. Even if
you work on your own tax forms, you may not want to keep up with payroll
requirements the way an outside payroll management firm must. Computer
maintenance is another area where it may make sense to outsource, by buying a
small amount of expertise and service that it would take you or other employees
a long time to master.
There are
also good reasons not to outsource. One is the possibility that the IRS will
not view your outsourcing partner as an independent contractor but as an
employee of yours. If that happens, you may find yourself paying that
individual’s Social Security taxes and possibly other penalties.
In
addition, the time may come when outsourcing a particular activity is no longer
cost effective—because of increased business volume, for example, or a shift in
the focus of the business that causes the outsourced function to warrant
full-time attention on site. Or. outsourcing might be
the right idea, but you discover that your first choice of contractors is not
the right choice. That’s a situation that will cost you time (and perhaps other
resources) to rectify before it saves you time.
Time and
money are your two most important resources. Outsourcing certain functions may
save you both. If you have a clear focus and a handle on your day-to-day
management, you’ll know whether and when it makes sense for your company. To
learn more about the pros and cons of outsourcing and other facets of business
operations, contact SCORE “Counselors to
If you
would like to discuss this subject or business planning, business growth
strategies or a specific business issue, contact SCORE® “Counselors to