Every owner of a small company or micro-business should ask themselves whether they need to do everything.
Many essential activities are not directly connected to making money – from maintaining the IT system to emptying bins and changing light bulbs.
The traditional argument for outsourcing is that companies do best by focusing on activities that bring in revenue, finding outside specialists to do the rest. Outsourcers can do these jobs more efficiently because they serve a wide group of customers and enjoy economies of scale.
Amelia Bishop, head of business services and advisory group Amelia Bishop Consulting, argues that if skills shortages get worse, outsourcers will become a more important way for companies to access the skills they need. In areas such as human resources, for example, businesses may not have the expertise internally to ensure employment contracts safeguard their interests properly.
“The HR outsourcer will update the company’s employee handbook or contracts, which minimises the chance of anyone taking action against the company, and then move forward with managing HR for them,” says Bishop.
She draws an important distinction between completely internal activities, such as accounting, payroll and HR, which are easy to hand over to an outsourcer, and customer or supplier-facing activities such as logistics and sales, where businesses need to work closely with the outsourcer on a day-to-day basis and require detailed service-level agreements.
“You really do need to manage it internally to make sure it’s delivering for your customers and your business,” she says.
Virtual PAs and outsourced switchboard services are also becoming more popular, partly because they offer ways for a small company to appear larger and more established. But Bishop warns of the risk that customers and contacts will be able to tell that the person they’re speaking to is remote from the company. “Selecting the right provider is critical and you should test them out for yourself,” she says. “Ask for a couple of numbers of companies they’re covering so you can hear how they come across.
“If you have someone representing you in that front-office role, they need to be right for your business. The best price isn’t always the best option.”
Online marketing is another area where outsourcing can not only save you time but also produce better results. Online marketplaces like Fiverr and People Per Hour have a large selection of online marketing tasks that micro-businesses can take advantage of from directory listings to help with setting up social media accounts.
The key issue for any enterprise looking at outsourcing must be the business case, which is always about more than cost. Using outsourcing to allow you to concentrate time and money on the core business proposition is a sound principle, but the commercial benefits must be compelling and the quality of the outsourced service must be right.
It must really make the company easier to manage. If too much time is spent managing outsourced providers, outsourcing soon fails. But for companies needing an efficient way to grow, outsourcing is a key strategy that entrepreneurs should consider from the start.
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This article has been compiled using information available to us up to 13/03/18.