A man in a chef's jacket sits at a marble-topped table and looks off to one side thoughtfully. His elbows are on the table and his hands are clasped together loosely near his chin. On the table in front of him are a few papers, a smartphone, an electronic tablet, and a white tea cup and saucer. In the background is a room with gray concrete walls and a few more tables with wooden chairs arranged around them.
It may be intimidating to relinquish control over part of your company to a third party, but outsourcing can provide much-needed expertise while freeing up time and resources. — Getty Images/Hispanolistic

As a small business owner managing various daily responsibilities, it can be difficult to find time to focus on your business’s growth. Often, the most efficient and affordable way to handle those tasks isn’t by taking care of them in-house, but rather by outsourcing.

Here’s what you should know about outsourcing for your small business.

The benefits of outsourcing

Without the right support, small business owners can easily feel overwhelmed; however, outsourcing can help alleviate those burdens. Data shows 83% of small businesses will continue or increase their spending on outsourcing services in 2023.

Here are four benefits of outsourcing.

[Read more: Running Your Business Alone? 10 Things You Can Outsource to Free Up Time]

Cost reduction

Those on a tight budget can benefit from outsourcing, as companies that outsource their work are not required to fulfill the same legal obligations as companies that hire employees. Unlike in-house workers, outsourced workers don’t receive benefits from your business and pay their own taxes and insurance — the outsourced worker must pay all of their own costs.

Additionally, outsourced workers don’t add much burden to a company’s overhead costs, and their expertise comes at a more affordable rate than W-2 employees because you’re only paying for the projects they complete.

Increased productivity

Outsourcing allows your team to hone in on the projects that are most important to your company’s success while passing along manual or mundane tasks to an outside party who can take on the projects at an affordable cost. You can then use your team to its full potential by having employees focus their expertise where it's needed most, avoiding feeling overworked or unmotivated.

For small business owners, outsourcing time-consuming responsibilities helps with time management, providing them with more time to focus on growing their business and achieving their goals.

Increased customer satisfaction

When small business owners outsource tasks and projects to external workers, they open themselves up to new opportunities, which can aid in company growth and improve customer satisfaction. That’s because outsourcing helps to waste less time on burdensome tasks, allowing business owners to take back control of their schedule and increase their productivity.

Instead of focusing on responsibilities that are essential to operations but not necessarily bringing in money — such as HR responsibilities or IT solutions — small business owners can outsource these roles and instead focus on high-priority, revenue-generating tasks and developing new ideas that will keep customers returning long-term.

Access to specialized talent

Sometimes your business will require a set of skills your existing team may not have. In these situations, outsourcing tasks to a specialized worker can lead to better and faster results — and at a cheaper cost overall — than if you were to task an ill-prepared employee with the project.

Outsourcing allows employers to seek out candidates from around the world, as opposed to hiring only local candidates. This means business owners no longer have to worry about finding the right candidate from their local talent pool; they can connect with the right worker for their needs online, regardless of where they’re located.

[Read more: 7 Business Tasks You Can Outsource]

When you’re deciding what to outsource, consider where your business is lacking expertise.

Things to be cautious about

Although there are many benefits of outsourcing, small business owners should also consider some of its potential disadvantages, which could negatively impact the business if unaddressed.

Lack of control

Outsourcing requires a small business owner to relinquish some control to the contracted worker, as they are not working in the office or part of the employer’s team where they can be more closely monitored and have their mistakes promptly addressed. While you can explain to the worker the kind of tasks you need them to perform, when and how they handle the task is up to them, as long as they ultimately fulfill what you contracted them to accomplish. A business owner may find that tasks are completed in a different way than they are accustomed to, which can lead to bigger, more long-term problems if not handled.

Communication issues

Because an outsourced worker isn’t a part of your staff, it can be harder to communicate with them — and a lack of communication can often lead to problems for businesses. Therefore, it’s important to find someone who is reliable, easy to get a hold of, and has a stable internet connection if you plan to outsource.

Companies should also consider that communication may be challenging based on where the outsourced worker is located. If they are in a different time zone than the one your company operates in, or if they prefer different communication methods than you’re used to, you could run into delays in communication or have difficulty reaching them in times of emergency.

Quality issues

When you hire somebody outside of your business — who isn’t immersed enough to understand your company culture or expectations, and who doesn't hold much stake in your business — you run the risk of receiving lower-quality work, which can negatively affect your business’s reputation with clients or customers. Therefore, business owners shouldn't consider outsourcing if they aren’t willing to spend time finding the right candidate for the role and closely managing and reviewing the work they complete.

Finding a reliable outsourcing company

Making the time to find the right outsourcing company can be difficult. Every outsourcing company operates in different ways — and not all can take on new clients — so it’s important to find a partner who works with your business’s specific needs, respects your intellectual property, takes direction, is easy to communicate with, and delivers a quality product on time and in your price range. Otherwise, the partnership could wind up wasting money and negatively impact your business’s revenue, reputation, and customer relationships.

Know when to outsource

Many entrepreneurs would prefer not to spend resources on tasks they can handle themselves. However, it’s important to consider outsourcing if your business isn’t equipped to handle the project independently (and could benefit financially by outsourcing it) or if your daily responsibilities have hindered your ability to focus on the business’s growth.

Keep in mind the financial impact of outsourcing and ensure that you can afford to pay an agency for its services; however, remember that outsourcing provides the flexibility to experiment, so you can change agencies or workers who aren’t the right fit for your business.

[Read more: Outsourcing HR: Is a PEO or ASO Right for You?]

Consider what to outsource and what to keep in-house

According to the U.S. Small Business Administration, accounting services are some of the most commonly outsourced roles, as improperly handled financials can lead to issues, such as penalties from the IRS. Other commonly outsourced services include marketing, customer support, human resources, shipping, web design, manufacturing, and payroll, among other areas.

When you’re deciding what to outsource, consider where your business is lacking expertise. For example, if your team doesn’t have anybody familiar with the latest social media trends, consider outsourcing your social media marketing to a third party. However, if a task can be properly handled by somebody in-house without burden or if the task is a high priority or involves confidential information, it’s best to keep the project internal.

How to choose the right outsourcing partner

Finding a fitting partner whose values align with your business is essential to a successful outsourcing experience, and it’s important to nurture the relationship to ensure a long, fruitful partnership.

Look for a company with experience by asking for references and proof of a positive history. They should be able to provide names and introduce you to satisfied clients who have worked with them for an extended period. Also, ensure the quality of the contractors it works with to ensure the work produced will be up to your standards. Consider making on-site visits to outsourcing companies you’re considering to learn more about their infrastructure and how they operate.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

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