Outsourcing often aids business owners
Published in The Tennessean July 14, 2014
By Ed Rappuhn – SCORE Nashville
“My business is growing and I’m working 80 hours a week but I’m hesitant to hire more employees in case business slows down. Any suggestions?”
Congratulations on your growth. Your concern about hiring is shared by many. There are a couple alternatives to consider.
Hiring people who can perform multiple functions is one choice. An employee might be performing accounting duties this morning, customer service this afternoon, and sales tomorrow. A worker with several skills is much more valuable and less likely to be without meaningful work during slow periods.
Outsourcing is often a better option. There are companies that specialize in performing specific tasks, allowing business owners to concentrate on running their business.
Payroll is commonly contracted to outside companies. Even with just a few employees, the time it takes to calculate and keep up with withholding, taxes and benefits is substantial. Outsourcing ensures that taxes are paid on time and payroll companies keep up with the changing laws.
Bookkeeping and accounting are often outsourced. Before programs like QuickBooks this was even more common. Now, with proper guidance on the front end, the bookkeeping function is easier to handle in-house. But when it comes time for tax preparation and planning, an accountant is still helpful and the benefits often outweigh the cost.
Few small business owners have law degrees. Programs like Legal Zoom can help in setting up your business and drafting simple contracts. But even then, you might want to engage a lawyer to review what you have done.
Independent sales representatives can sometimes handle sales on a commission basis. A good example is a “manufacturer’s rep” that handles a variety of product lines being sold to wholesalers or retailers. If you have a narrow product line and others in your industry have the same, independent reps can handle multiple, complementary products much more efficiently than if everyone had their own sales people.
Customer service can be outsourced. This might allow 24-hour service even when your business is closed. But because customer service is often a critical competitive advantage for small businesses, you need to use surveys and make direct contact with customers to make sure they are happy. Don’t outsource functions that can hurt your reputation without proof of positive results.
When outsourcing, you are often paying for expertise you don’t have in house. This means higher quality outcomes. Even if the price is higher than what you would pay an employee, you might get more productivity from a specialist and you don’t have the costs of taxes, benefits, hiring and training.
Your goal is to run your business better, take good care of your customers, improve your bottom line, and have some time to enjoy life. Outsourcing might help.
Ed Rappuhn is a mentor, workshop facilitator, and the past-chair of SCORE Nashville. SCORE mentors guide entrepreneurs in starting and growing their businesses. Sign up for a free SCORE mentor, find out about our reasonably priced workshops and other services, or volunteer to become a SCORE member at www.scorenashville.org.