One of the most important things you need to learn as a small business owner is how to delegate. It’s easy to convince yourself you can, or need, to do everything on your own, and it’s hard to trust others to do the job the way you want it done. But the reality is that sooner or later you’re going to need to get some help so that you can continue to grow your business and have success. Deciding which tasks to delegate and which ones to keep doing on your own is one of many difficult choices you’ll need to make as a small business owner.
Outsourcing is a great way for small businesses to maximize efficiency and grow. These firms specialize in what would otherwise be just one aspect of your company, often delivering better results for cheaper.
However, just because outsourcing is good, it doesn’t mean it’s always good. Improper outsourcing can have disastrous effects on your business if you’re not careful. But if you know what you’re looking for, and if you’re aware of the risks, then you can easily use outsourcing to help grow your business to the next level.
Here are some reasons why your small business needs to be smart about outsourcing.
Outsourcing is an Expense
Generally speaking, outsourcing is cheaper than trying to do things in-house. Think about it. If you’re spending hours and hours managing payroll, cutting paychecks, calculating tax obligations, managing benefits, etc., then you’re using the time you need to work on growing the business. By outsourcing some of these tasks, such as hiring a PEO for example, you can free you and your team from these responsibilities, giving you more time to work on the aspects of the business that will promote growth.
However, this isn’t a magic formula. Outsourcing the tasks that you do well, or those that make up the bulk of someone’s job duties can create lots of redundancies. You’ll either end up redoing a lot of the work you outsourced to get it to the standards you’ve become used to; or you’ll end up with employees who suddenly having nothing to do, meaning you’re paying two people to do the job of one.
A good example of this is with marketing/PR. Sometimes business owners will bring in some outside help, but all this does is handcuff internal employees, resulting in redundancy and waste.
The solution to this is to make sure you’re outsourcing the right things. Take a long, hard look at your processes, and perform a cost-benefit analysis to determine which ones make sense to outsource.
This way, when you do start seeking outside help, it will be for things you really need, justifying the expense and giving your company a real efficiency boost.
Data Protection and Fraud
The big threat of the digital age is from hackers and other cybercriminals. Eager to get a hold of valuable financial information, hackers are increasingly targeting small businesses. This is because small businesses tend to have weaker defenses, either because they don’t have the resources, or because they mistakenly think hackers won’t bother with small targets. But the information you hold is still valuable, and when there’s something of value, there’s always someone who wants it.
As with any security system, your cyber defenses are only as strong as your weakest link. When outsourcing work, it’s normal for you to give outside firms at least some access to your servers, and this can create a soft spot in your security efforts, potentially opening the door hackers.
If the company you work with does not have a plan in place to protect themselves, then you too are at risk. And considering the vast majority of small businesses do not have the resources to be able to bounce back from a cyber attack, it’s important you take this risk seriously.
Do Your Due Diligence
Before hiring any firm or agency, find out what they’re plan is to keep your data safe. If they don’t have one, or if you don’t trust it, then you should probably think about looking for someone else to do the job, or simply keep the operation in-house.
Another good thing to do is to ask which employees will have access to your data. It’s good to keep the group small, as human error is typically the biggest cause of fraud (people accidentally give access to a hacker as a result of a phishing scam), and you may even want to do your own background checks on these individuals to make sure everything is safe and secure.
Bad Outsourcing Can Hurt Morale
Historically, the concept of outsourcing has a bad reputation. It conjures up images of departments being cleared and offices closing. But this is an unfair depiction of an otherwise sound business practice that has been in use for the majority of human history.
However, this doesn’t mean all your employees will see it this way. If you tell them you’re going to seek outside help, some people may see this as you gunning for their job.
An announcement about outsourcing may send people running to update their resumes, and this will cause morale to suffer, as well as create a disconnection between people and their jobs, both of which will result in declining productivity.
Clear and Open Communication
It’s important you communicate with people so that they know why you’ve decided to seek outside help. If you make sure to only outsource where you need it most—in areas where there won’t be redundancies—and you explain clearly the reasons why you’re outsourcing, then employees should see this as a smart business move that will help improve the company’s long-term prospects.
Maintaining a positive workplace environment is crucial to the success of your business. If you outsource smartly and communicate well, then you should have no problem doing this while outsourcing tasks that outside firms can do better.
Be Smart and Grow Your Businesses
Outsourcing is a tremendous opportunity for you to grow your business. It allows you to make use of industry-leading specialists and leverage their experience into exciting results. However, if you’re not careful, there can be consequences. Follow the tips presented here, and you’ll soon see just how powerful intelligent outsourcing can be in determining the future of your business.
About the author: Jock is the founder of Digital Exits, a business brokerage service. Over the years, he’s learned many lessons about the right and wrong ways to grow a business, and he enjoys writing about his experiences to serve as a resource for other small business owners.