How Small Businesses Gain A Competitive Advantage With Outsourcing
If you own a small business, you know how difficult the task of organizing your company’s day-to-day activities can be. Keeping on top of accounting, inventory management and the tasks that are required to keep your business afloat can be a daunting task. Outsourcing can be a huge benefit for small companies looking to focus on their core tasks.
First, we must establish the difference between outsourcing and offshoring. The word ‘outsourcing’ is looked down upon by many, its assumed meaning is that jobs are leaving the national economy and being exported to a foreign economy like India or Mexico. This actually describes offshore outsourcing or “offshoring.” There are many companies within the United States that will freelance or take on outsourced work.
You probably wouldn’t let an accountant design your business’ logo, just like you shouldn’t expect someone with no accounting or inventory management experience to handle your books or manage your warehouse.
Outsourcing jobs will have a few direct benefits for your company. First, it will reduce your HR costs. Hiring and training a new employee is costly and there is always the chance that the employee will not meet your standards. Hiring a job like accounting out to another firm means you will not have to manage another employee and won’t have to pay their salary and benefits.
If your firm is relatively new, it is important that you and your team are able to focus on your core tasks, such as attracting clients and delivering your goods and services. Outsourcing is a great way of guaranteeing that you will remain focused on the task at hand without being distracted by the day-to-day tasks like bookkeeping or tech support.
Large companies are able to utilize economies of scale to be more competitive than smaller companies. By outsourcing, small businesses can enjoy those same economies of scale and lower the costs that they end up passing on to consumers.
Once your firm becomes a Fortune 500 company, you can think about doing everything in-house. Until then, outsourcing is a great option.
Contributed by Brett Thorne, who writes about small business, new software, inventory management and time management.