Could outsourcing help your business?

Do you have a to-do list as long as your arm? Sadly, it’s very normal for small business owners to have an ever-growing list of essential tasks, which can start to feel overwhelming. Or maybe you have the nagging feeling that you need an expert to really nail certain jobs. 

Outsourcing could be the answer, giving you the flexibility to hand over some work to specialists and give you back some much-needed time. 

What is outsourcing and why do businesses do it?

Outsourcing is the practice of getting work done outside the business, often giving responsibility to an individual contractor or agency. The business might pay a set amount for a specific service, or be charged an hourly rate. 

Growth isn’t easy to manage: success normally goes hand in hand with more work, which leaves you with less and less time for other business tasks. So you might want to get some help. For some businesses, they’ll feel confident enough in their cashflow to hire an employee. For many others, outsourcing makes the most sense. 

Which jobs could you outsource?

The truth is, you can outsource most jobs within your business. You just need to figure out which tasks are most cost-effective for you to keep, and which are more practical to outsource. Some of the common jobs to outsource include:

• marketing
• website build and maintenance
• accounting
• IT support
• design
• recruitment
• customer service
• manufacturing and shipping
• research

Pros and cons of outsourcing

Is outsourcing right for your business? The answer, as per usual, is ‘It depends’. Some businesses use outsourcing strategically to help them scale up without taking on lots of extra responsibilities - while others find outsourcing takes almost as much time as it saves. 

The good bits

• You’ll have fewer tasks on your plate, so more time available to get work done or plan for the future.
• Experts! You’ll have access to experts who can do specific tasks quicker or more effectively than you.
• Contractors can often get started very quickly once an agreement is in place.
• It’s easier to cancel or pause their support if your needs change or your cashflow is struggling.
• You normally won’t have to provide tools, office space or other material support.

The not-so-good bits

• It may cost more money to outsource some services than doing them in-house.
• It takes time for a contractor to get to know your business, so they might be slower or require more of your input initially.
• You may spend a long time briefing them on tasks or providing feedback.
• They may have limited availability for last minute requests and support.

How to calculate the cost of your time

How do you know whether outsourcing is good value for money? The first step is to understand the value of your time. 

If you charge your customers an hourly rate, that’s a good indicator of how much your time is worth. If not, there are some quick sums you can do to figure it out. Find the rough amount of time you spend working - don’t forget to factor in admin tasks - and divide the amount of money you earned by that sum. Make sure you keep the same time frame for both, perhaps for an average month or for the last year.  

Now you know the value of your time, you can figure out how much time/money you’d save by outsourcing a task. If a task takes you three hours but a professional finishes it in one hour, then you can decide whether their price is ‘worth it’ for your business. Why not start by figuring out whether accounting software could save you time and money?

And be honest with yourself. Time spent thinking about a task, researching how to do a task, and dreading a task is all time you’re working - and time you could save if you outsourced it. 

Outsourcing or hiring - which is best for your business?

If you’ve done all the maths and figured out that you need to outsource some tasks, there is still a follow-up question. Do you actually need to outsource, or do you need to hire an employee? 

For most small businesses, outsourcing is the first step - with less power comes less responsibility. 

As you and your business grow in confidence, you might start hiring for certain roles. Hiring is excellent when you identify regular tasks that need to be done every week, but isn’t as easy if the task only needs to be done once a quarter. 

This is especially true when the tasks are a core part of your business - like baking cakes in a bakery or categorising expenses in a bookkeeping practice. If the work is part of what makes your business unique - best to keep those talents in-house!  

Accounting tasks holding you back?

Finish your accounting admin in record time with the help of FreeAgent and our CoPilot accountant partners. You can find an accountant who’s the perfect fit for your business and work with them in your FreeAgent account, taking the pressure off managing your finances. Just register your interest when you sign up to a free trial of FreeAgent and we’ll contact you with more information.