There are many benefits to outsourcing. It allows you to delegate services that are crucial to your business, for a fraction of the price. You can’t do everything within your business, and we advise that you seek alternatives when in-house costs are too high. So why not outsource?
Outsourcing, also known as sub-servicing, is the process of contracting a third party to perform services that would otherwise be performed by in-house employees. In recent years, the term has been linked to contracting with people or businesses in other countries, but that certainly is not a requirement. So for the purposes of this blog, outsourcing will be defined as receiving traditional in-house services from any other company (be it around the world or just down the street.)
At DeepSky, we maintain that when you outsource, determine the specific services that you would otherwise manage in-house. This can range from data entry to graphic design. Know the differences between accounting and bookkeeping, as one example. Calculating the amount of potential savings.
Now that we know what outsourcing is, we can discuss the benefits. There are many, and we can always recommend using this.
The Benefits Of Outsourcing
When you’re a new business, you probably don’t have the means to have the best of the best working on your team. This makes it much harder for you to flourish to the level of similar businesses that have been around longer. Established companies will hire away talent that can arrive to your facilities, and they have longer relationships with vendors.
Let’s say you’re an entrepreneur and you realize that your business is getting bigger, and the simple tasks you used to be able to do on your own is getting more and more time-consuming. You’re going to need one person to work daily on your website, another to do payroll and other administrative tasks and of course, you’re going to need an accountant. All of these things would be great. But guess what?
The people parading around your tiny office and drinking all your coffee are going to cost you a minimum of about $120,000/year*. Now I don’t know about you, but most startup companies don’t have that kind of cash lying around.
Also, keep in mind that this number is to have just one person working on each task. If you’re looking to have an entire department, multiply that number by 3 to 5. Oh, but don’t fret. We live in a society of opportunity for all.
We believe that any person should be able to flourish, even if they don’t have as many resources as people already in the game. So in comes outsourcing to level the playing field. You then get a fair chance to compete.
Another thing on everyone’s mind, of course, is the price. The cutting of costs should be a major factor in making your decision to outsource. The variable costs you would have paid hourly to an employee become a much lower monthly fixed cost.
Consider how long the hiring process can be for an in-house employee and the costs. Time is money, and so is cashflow. First, you need to spend time training them on their tasks. In addition to all of this, you need to pay the overhead costs of maintaining a workplace for them that allows them to complete their projects.
That’s not even going into taxes that need to be deducted from paychecks and reported to the IRS. For full-time and part-time employees, you need to pay a specific tax on them. That can potentially eat away at your revenue. The same goes if you decide to hire independent contractors, which require a 1099 form. After all that, they may even not be the right fit.
Outsourcing releases the capital you would have spent on an employee to go back into the development of your business. Also, potential investors may be more interested in your company because they realize that you are able to put capital directly into revenue-producing or product development activities.
Focus On Your Core
When you outsource tasks that would otherwise take up the workday, you allow in-house employees and managers to handle the higher priorities in your business. They can produce products, talk clients, and increase revenue significantly.
This may seem insignificant, but you are essentially paying for time. The time that you could be spent managing finances could go into building client relationships. When you focus on core tasks, it means that you are investing people into growing your business. A project manager would rather not be calculating overhead costs when they could be completing deadlines.
So yes, it’s cheaper to outsource the work, but the quality of the work is anything but “cheap.” With many companies that offer outsourced services, a carefully selected team is committed to each customer. So the quality of work is actually better because of the extra knowledge brought to the table when compared to an in-house solution.
Rather than hiring that fresh out of college accountant who will probably send the IRS knocking on your door (oh I’m just joking), why not have the best of the best on your side? Now, there are also other wonderful benefits such as not having to deal with daily accounting jokes or a major increase in the amount of coffee leftover every month.
However, the obvious reason to consider outsourcing is the quote I started off with. “You can’t do everything” and if you’re like most small businesses, you can’t afford to have someone else do everything either. Until now.
Increase Efficiency By Outsourcing With DeepSky
DeepSky is ready to help you with outsourced accounting services. Our Financial Wingman™ program will help you reach the next level of increasing your revenue and managing your numbers.
Reach out to us today. DeepSky wants to ensure that you have the most affordable outsourced CFO. Reduce your costs with our assistance.
*$50,000 for the accountant, $40,000 for the Web Developer, and $30,000 for the administrative assistant.