Written by a Contributor
There’s an expression that it “takes money to make money.” And while this is certainly true, another key to financial success is knowing how to wisely spend the money you do have.
And as a small business (whether that means a monetized blog or a full-fledged ecommerce store), this could not be more true. Part of the appeal of starting an online company is that it operates with extremely low overhead, so being smart with your money is a must if you want to grow your business into something successful and sustainable.
Outsourcing allows you to cut down on costs while also improving efficiency and productivity, helping you save money and get more out of what you spend. But to do this right, you need to make sure you’re outsourcing the right way. This includes identifying where you need the most help, but it also means making sure you’re going to get adequate returns. To grow an online business, consider the following four things about outsourcing:
Virtual Admins to Start
If outsourcing can save you time, money or both, then it’s probably a good move for your company. It’s smart to begin looking at areas where this is most likely, and the best place to start is roles that can be easily taught. For example, data entry, accounting, or some aspects of even human resources, could be handled by a virtual administrative assistant (VA).
Outsourcing administrative tasks means two things for your business:
- You can now spend more time working on growing the company.
- You only need to pay people for the work they do.
This is a really affordable way to increase productivity, and it will give you more time and money to focus on aspects of the company more likely to generate growth.
Better Value Labor
Labor is expensive. But as you grow, you’ll need more people power to handle increased the volume of work. Managing the expense of hiring more people is going to be key to the success of your business. And there are two ways to do this:
- Find ways to pay less for labor
- Find opportunities to get more bang for your buck
When outsourcing, this means you can either find someone who is willing to do the same job for less, something that works quite well if you’re able to find a qualified individual living in a part of the world with a lower cost of living. Or, it means you can outsource in areas where you stand to gain the most.
For example, if you were looking to expand your social media presence but have no idea how to do so, it might be a good idea to outsource to a marketing firm who can help you produce results for your investment. You may not spend much less money, or you may even spend more. But doing things on your own only feels cheaper. It really isn’t because of all the time lost learning how to do something you’ve never done before.
Increased Returns
A key part of any outsourcing strategy needs to be a cost-benefit analysis. It may slow things down a bit, but it’s a good idea to make sure switching to a third-party vendor is really the smartest move.
Performing an accurate and useful cost-benefit analysis asks you to calculate what you get for how much you spend on a given part of your business. Then compare this with the fees associated with using an external firm. It’s a straightforward idea, but the more complicated your business is, the harder it can often be to figure out exactly what effects the cost of performing a certain task.
Furthermore, determining returns is difficult. In an attempt to win business, the vendor is going to promise a lot. But do your homework and make sure they’re capable of keeping their word. Ask around in the industry to get an idea of their reputation, and do some research online reading reviews and other comments about what it’s like to work with a particular firm.
Automation
One type of outsourcing most people don’t consider is automation. While it’s not what we think of as traditional outsourcing, but it’s the same idea: you’re paying for work to be done by someone (or something) else.
The reason for discussing automation now is because many small business owners don’t know how valuable it can be to their business. Even simple things, such as setting up Hootsuite to post to social media for you, or using MailChimp to manage your email lists, \ can save you tons of time and money.
So as you start going through your business and auditing it for efficiency, take a look at where you could be automating. A small investment in a software package that can do one process faster and cheaper than you can might be just what you need to get your business up and growing.
Start Small
Large corporations outsource constantly, and they have whole teams dedicated to managing their third-party vendors. And while this makes sense for them, remember that as a small business, you’ll want to begin slowly. Managing contractors or vendors can be tricky, so start with a few things and slowly do more. This way you can take full advantage of the cost savings and productivity boost outsourcing can provide to your business.
About the Author: Jock Purtle has been self-employed since he started his first business in educational services when he was 19-years-old. He enjoys sharing his expertise with new business owners to help them launch their business and see the growth they want. Connect with him on LinkedIn.
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