Outsourcing for Small Businesses
By Rynagh Cornish
Valtus has moved into a new office in London.
We are in a shared workspace and surrounded by other small businesses and freelancers offering a range of services. The community strives to bring its members together, promoting the idea of businesses helping each other to succeed.
There is a online network for members that includes a forum where businesses and individuals can post as they like. The majority of posters are either looking for someone to fill a business requirement or advertising their own services. Posts attract lots of interest and discussions follow.
It is a reminder of the way outsourcing of certain business functions, whether on a one-off basis or as an ongoing partnership, can be a great asset to small businesses. For many, it is likely to keep them afloat.
So what are the benefits of outsourcing rather than handling everything in-house? What are the keys to making it work? And what sort of things can you outsource?
The most obvious reason companies choose to outsource is to take pressure off the bottom line. Apart from the usual overheads of national insurance and pension contributions that come with hiring permanent employees, there is also workspace and equipment to consider.
Despite more employees working from home, many still have a desk to their name for when they come into the office. For a small business in a serviced workspace in London, adding an extra employee could cost up to £800 extra per month.*
In terms of equipment, software and access to systems is critical but costly, so the fact that external service providers have their own IT set up is a really attractive bonus. For instance, while hiring an in-house graphic designer would also require the purchase of creative software, choosing an external design company eliminates the need for extra investment.
Focus on business objectives
Employees of small business are multi-taskers. A financial controller might double as the chief telephonist while the CEO might find herself onboarding new staff members. While multi-tasking is positive in terms of team collaboration, it can take staff away from their main focus. For small businesses that need to put as much energy possible into driving and maintaining clients, to-do lists filled up with too many other tasks detract from revenue.
Additionally, multi-taskers are rarely experts in every field they try to cover. Particularly if a responsibility has landed on their desk just because there was nowhere else for it to go. For highly-skilled or specialised functions such as accounting, digital marketing or IT, it is less risky and more efficient to find an outsourced partner than to fill the gap in-house.
Making it work
Meet in person
Even if your outsourced company or freelancer works 100% remotely, there is still great benefit in face-to-face contact. In a 2017 study carried out by Western University and Harvard Business Review, researchers found that requests made in person were 34 times more effective than those made in email.^ While it is a good idea to set out your expectations in writing, in-person meetings allow for discussion and a sense of affiliation that cannot be matched electronically. It is good practice to meet with the servicing party at least upon initial engagement and ideally, once every six months thereafter.
Aim for mutual understanding
For an outsourcing partnership to succeed, your company needs to clearly communicate your goals, requirements and service level expectations. If the provider will be in contact with clients on your behalf, there also needs to be an understanding of your company values and culture. On the flip-side, the outsourced company needs to be honest about what they can deliver, at what pace and how often. If this is not clear from the start, you will risk disappointment and unnecessary conflict.
Don’t forget Data Security
Your business has probably stepped up its internal data security measures recently, particularly since the onset of GDPR. If your outsourced provider is going to have access to your internal data, it is integral that they too have processes in place to ensure it is kept safe. This should be one of the first issues you address before engaging with them.
In any situation where one party is delivering a service to another, the servicing party is more likely to perform positively if the receiving party works with them respectfully. As outsourced providers are delivering an essential function for your business, their performance is directly linked to your organisation’s success. Work as a team and if something goes wrong, resolve the issue together.
Key Outsource Areas
Small businesses rarely have a dedicated HR person, normally instead using Finance, Operations or Management to take care of HR as needed. The biggest advantage of outsourcing is access to skills, knowledge and support in this area. As employment law is complex, an outsourced HR specialist can ensure you are meeting requirements.
In-house finance departments often operate quite separately from the rest of the business, so it makes sense that this is one of the most popular functions to outsource. External providers can manage as much as you wish, such as payroll, invoices and billing, credit control and expenses.
Virtual PAs work remotely and can be enlisted to do anything a traditional PA might do. Whether you need help to answer the phone, manage your diary or format a spreadsheet, the VA can do it for you. VAs operate through agencies or independently through gig-economy sites such as PeoplePerHour or Upwork. Both options allow you to pay as you go or a fixed price for a specific one-off task.
This includes a wide range of sub-functions. Copy-writing, brand strategy, brochure design, event planning and social media all fall into the category. The best thing about outsourcing marketing is the flexibility to pick and choose the specialist skills you need. And as freelancing in this area is rapidly increasing in popularity, there are plenty of skilled people to choose from.
IT is the most popular outsourced function for businesses of all sizes.† Businesses revolve around their IT systems, so reliable support is fundamental. IT providers can handle everything from day-to-day queries to setting up hardwire to setting up a customised computer system for your team.
* Figure based on WeWork London rates, WeWork.com
^ Face-to-Face Request Is 34 Times More Successful Than an Email, Havard Business Review
† Deloitte’s 2016 Global Outsourcing Survey, Deloitte