How to Build a Better Business with Outsourcing

How to Build a Better Business with Outsourcing

A comprehensive guide on the what, when and how to outsource for your small business.

BY NANCY MANN JACKSON

When Laura Lee Sparks left her job as a law firm manager to launch her own business, she knew from the beginning that there were certain tasks she didn't want to handle. The owner of Legal Marketing Maven--a firm that helps law firms streamline their practices through outsourcing--Sparks practiced what she preached from the start, hiring an outside bookkeeper and slowly adding to her virtual team of contractors. Within months, her business revenues reached six figures.

"Most entrepreneurs have great talents but many times they think they can do it all," Sparks says. "That can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income."

Entrepreneurs have long seen outsourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small businesses--and for some small firms, outsourcing has made a powerful impact on their growth, productivity and bottom lines.

"More small businesses are outsourcing tasks these days because technology has advanced to the point of professionals being able to work from anywhere in the world, coupled with the availability and accessibility of extremely qualified professionals who have decided or been forced to leave the corporate world, [such as] virtual executive assistants, marketing directors, graphic designers, transcriptionists, paralegals, web designers, HR consultants, bookkeepers, PR directors, IT specialists, and the list goes on," Sparks says. "These freelancers come on board as subcontractors and save the small business owner the burden of paying overhead associated with payroll taxes and expenses such as health insurance and worker's compensation, as well as the space constrictions that growing a company in-house can present."

Taking the first steps toward outsourcing can be time-consuming, but figuring out how to build your business with help from outside professionals can offer increased efficiencies and economies of scale. "Progressive entrepreneurs realize the unstoppable power of outsourcing to handle aspects of their business that are essential but simply don't make sense for them to deal with personally," says David Walsh, entrepreneur and author of Source Control, an e-book on effective small business outsourcing. "Small business, augmented by a global pool of human capital, can compete directly with the biggest players in their space, and win."

When to Outsource 
For every company, the right time to outsource is different. Some businesses have in-house staff to handle daily activities, but may need outside help to undertake new projects that don't warrant another full-time employee. When you and your current employees are unable to manage the day-to-day business of your company and build the business satisfactorily, it may be time to consider outsourcing. For Tonya Thomas, president of The Small Office Assistant, the right time was when she realized that although she wanted her business to grow, she had no time left in her day to pursue that growth.

"At first I felt like I was the only person who could do the work efficiently; I wanted control over everything," Thomas says. "But I wanted my business to grow and in order to do that I had to let go and start delegating." Letting go paid off: The first year she began using contractors to help carry her workload, Thomas doubled her company's revenue.

For very small businesses, Sparks recommends outsourcing from the very beginning. She suggests starting out with a bookkeeper and a virtual assistant, and growing the team from there. In her own business, Sparks now contracts with a virtual bookkeeper, a web designer, a ghost writer, a graphic designer, an executive assistant and a project manager.

What to Outsource 
The types of tasks that are best outsourced fall into three general categories, according to Gregg Landers, director of growth management at CBIZ MHM, the nation's eighth largest accounting and business services provider. They include:

• Highly skilled, or executive, expertise. For example, you may not need to pay a CFO's salary, but you could have a CFO-level person to come in a few times each month to provide financial analysis and ensure that the bookkeeper is handling the books well, Landers says.
• Highly repetitive tasks. Accounts payable, data entry and shipping inventory could fall into this category.
• Specialized knowledge. "An example might be the IT support for your accounting system or your network," Landers says. "You may not be able to afford or need a full-time IT person, and it is easier to change to an outsourced provider with the right skill set as your IT needs change."

Finding the Right Contractors 
Before handing over the reins, be sure you're working with the right partner. While technology makes it much easier than it once was to find capable, reliable outsource providers, the selection process is still vitally important. A good starting place is your own network; ask other business owners or your accountant, lawyer, or banker if they can recommend a provider offering the services you need. Online networks like LinkedIn and Twitter make it easy to expand your personal networks and to ask for recommendations.

Making it Work 
After you've found a provider, your work isn't over yet. Even after you've checked references, "don't be afraid to put a little extra time creating a specific contract that outlines exactly what performance is expected," Resnick says. "Use incentives to motivate the outsourcer to focus on what is most important to you rather than their own preferences or their assumptions about what you want."

Counting the Cost 
So what can you expect to pay a contractor for allowing you to rise above day-to-day tasks and build a better business? It depends on the type of work you're buying, the skill level and location of your provider, and your own preferences.

For instance, SeatGeek's Groetzinger says that through online hiring sites, you can find contractors in developing countries who will work for less than $1 per hour. While U.S.-based contractors will likely require higher fees, they may be lower in rural areas than in metropolitan cities where the cost of living is greater.

Facing the Challenges 
While outsourcing can yield great advantages for a small company, it's not without challenges. If you choose to work with offshore providers, language barriers and time zones can be difficult to deal with. However, Walsh says that focusing on making your own communications clear can help overcome confusion for those who are not native English speakers. And "time zones create more opportunity than inconvenience, as you can extend your productive hours by handing tasks over to someone during their workday," Walsh says. "Assign a task at night, and awake to find it complete and waiting for you."

Reaping the Benefits 
Although there are risks, outsourcing ultimately offers business owners great advantages. The process allows you to build a team of skilled professionals without adding the expense of full-time employees, and to avoid getting bogged down with tasks that can be completed without your attention, Sparks says. It's an affordable, proven strategy for growing your business without letting it take over your life.

"Handing off work forces you to objectively, ruthlessly and systematically consider your activities and the steps taken to perform them," Walsh says. "Defining a process flushes out inefficiency."

When you outsource, you can focus your time, attention and resources on your company's core competencies--and spend your time setting new goals and finding ways to achieve them.