4 Key Business Functions You Should Consider Outsourcing

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For small businesses and startups, labor costs are your largest expense by far. Have you considered outsourcing your business functions? After all, you’re not just paying an employee’s salary; you’re also paying employee benefits, unemployment tax, and workers’ compensation. In general, the true cost of an employee is 25-40% more than his or her base salary.

This helps explain the growing reliance on outsourcing. In 2019, roughly a third of small businesses already outsourced some business function, and 52% were planning to do so. In 2021, the number of small businesses planning to outsource has shot up to 80%

Outsourcing is perfect for growing companies because it offers extreme flexibility, saves time, and allows you to work with top experts without the hefty price tag. Of course, you should never outsource anything related to your competitive advantage. (If it’s your stellar service that sets you apart, for instance, you would never want to outsource customer support.) 

But there are certain core functions that every company must handle — things like accounting, legal, marketing, and cybersecurity. Certain businesses may also need to deal with shipping and fulfillment or data entry — things that keep your business running but don’t impact your end product or service. 

According to Gregg Landers, director of growth management at CBIZ MHM, there are a few categories of tasks that are ripe for outsourcing: tasks that require a high degree of skill or specialized knowledge and highly repetitive tasks.

Here are four areas you should consider outsourcing to cut costs and see better results:

1. IT Training and Certification

If the pandemic taught us anything, it was the value of a highly competent IT department. With many teams still working remotely, you need to ensure that your IT person or team has the training they need. But trying to do that in-house is simply not cost-effective. According to a survey of learning development professionals, it takes an average of 132 hours to develop a single hour of online learning content. That’s more than three weeks’ worth of work!

This is why it’s better to invest in third-party training and certification programs. Outsourcing your group training to a company such as IBEX Business Experts reduces costs and ensures that your team is consistent and unified. You can choose instructor-led courses or virtual learning so individuals can work at their own pace.

2. Business Accounting

Any business that hopes to stay in business needs the help of a bookkeeper, accountant, or both. You need someone to keep your records up-to-date, track expenses, run payroll, file quarterly reports, and do your end-of-year taxes. Trying to manage all these tasks yourself is a recipe for disaster — or at least an audit. You may also want someone to do an in-depth analysis of your business or help you with financial planning, but that doesn’t mean you should hire a full-time CPA.

In the United States, the average base salary for an accountant is $54,127. That’s not counting bonuses, healthcare, and other costs that come with a salaried employee. Then there are the hidden costs of training and management for an in-house accountant. For most small businesses, it’s much more cost-effective to outsource this role. You can use software like Gusto for payroll and pay a licensed CPA to do your taxes, or you can work with an accounting firm to handle all these tasks.

3. Outbound Sales

If you’re trying to grow your business quickly, you’ll need to scale your sales team. The trouble is that it’s extremely difficult to develop a repeatable sales process, find the right talent, and train them to be effective team members. Hiring aggressively is also risky — especially in sales, which has the highest turnover rate of any sector. It can be devastating (both emotionally and financially) to invest weeks or months in training only to see those people leave.

A more sensible approach for many businesses is to outsource certain sales roles, such as outbound sales or business development. Outbound sales encompasses tactics like cold calling or emailing, attending trade shows, and selling door-to-door. Hiring a third-party company to do this for you will give you a steady influx of new leads while freeing up your in-house reps to do more high-value work. Because they know your company inside and out, they’re best suited to develop those relationships and close deals.

4. Marketing

Marketing is a broad term for a highly specialized and complex industry that changes each and every year. The type of marketing you should be investing in will depend on your business, your budget, and your target market. 

For instance, if you’re an online retailer, you may need to invest in pay-per-click ads, social media, influencer marketing, or all of the above. If you’re a service-based business with a long sales cycle, inbound marketing might be your focus. If you’re a mom-and-pop shop that only serves customers locally, you might focus your attention on search or on traditional media channels.

The kicker here is that your marketing tactics should change if you’re not seeing results. Hiring a full-time marketing person is risky because no marketer is an expert in everything. If you hired someone on the assumption that you’d be creating bus-bench ads and direct-mail pieces, that person is not likely to be as effective if you shift your budget to SEO and paid search. Unless you’re planning to build out an entire in-house marketing team, you’re nearly always better off hiring a firm that specializes in whatever tactics you’re pursuing.

As your business grows, it can be exciting to imagine what you could accomplish if you only had a team member dedicated to X. But outsourcing business functions that aren’t your core competency is almost always a better choice. It allows you to work with the top professionals in the industry — without paying their entire year’s salary. It also means you can invest in talent that can help you grow your business faster.

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Renee Johnson is a freelance writer who covers the business and tech worlds. With experience writing for a variety of tech-based publications and a background in business, management, and finance, Johnson discusses new technologies and their impact.