Is Outsourcing Right for Your Small Business?
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Is Outsourcing Right for Your Small Business?


Are you in or out? Outsourcing is a great way to extend the arms and legs of your small business, but it does have its drawbacks. To help you decide whether it’s right for you, we have designed a staggeringly serious and scientific guide to the pros and cons of outsourcing.

Is Outsourcing Right for Your Small Business?

PRO: Save Your Dough
Sending your business out likely means keeping your money in. Outsourcing typically translates to lower costs for you, both for overhead and labor. When considering employee costs, look beyond the salary. After factoring in benefits, vacation, days off and so on, employees will cost double their base salary, reports Entrepreneur Magazine. Lower costs means a smoother cash flow, which can translate to financial security and growth. In addition to saving on costs, outsourcing some aspects of financial management and allowing experts to handle your balance sheet could lead to newfound savings.

CON: The Dependency Drawback
Indiscriminate outsourcing would be a mistake. Some outsourcing, such as health insurance plans and legal services, makes sense for most people. However, appropriate outsourcing in other areas depends on each company. For example, managers with accounting backgrounds might prefer to handle the finances on their own.

Small business owners who want to contract their finances out may be making a wise decision, as experts should be handling finances. Nonetheless, don’t let outsourcing keep you from attaining your own level of expertise. While micromanaging is a bad idea, small business owners should have a feel for every level of production, especially when it comes to the foundations of financial literacy.

PRO: Keep Your Eye on the Prize
Outsourcing allows you and your employees to focus on business development, while delegating less central tasks. Hiring employees and creating structured departments to handle peripheral responsibilities can create unnecessary costs and troubles. For example, outsourcing your accounts receivables management means less time listening to excuses for late payments and more time focusing on important areas. If you suddenly need extra hands to take care of a big project, no need to worry about temps or deadlines.

In short, outsourcing can save you essential time, whether to focus on your small business or simply have more time for yourself. According to Bank of America’s Small Business Owner Report, over half of small business owners forgo free time for work.

CON: The Closed Door Conundrum
The whole point and problem of outsourcing may be relinquishing control. Of course, this very liberty helps you save time, but it could also create problems. You are dealing with an external company that may not know the ins and outs of your particular process. Outsourcing may be helpful, if the service provider is an expert in that particular field, but small businesses with highly specialized practices should consider carefully before outsourcing.

Additionally, when everything happens “under your own roof,” you can trust the quality and ethics of your business practices. If you do outsource, make sure that your service provider is socially responsible in line with your own standards. Customer references and accountability services such as the Better Business Bureau may help you weed out the less admirable providers.

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