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The Value of Outsourcing

Written by: Heather Villa

Article Overview: The Value of Outsourcing - "I'm too small to hire staff" say many entrepreneurs. But that's an expensive assumption to make. In this article, you'll read why paying someone else to do specific parts of your work actually makes good business sense, and can set you up to grow your business faster and more effectively. Think your business is too small to staff? Think again! Keep an open mind and read this article and you just might post a "help wanted" sign!

The Value of Outsourcing

The Value of Outsourcing


Many people still associate outsourcing with manufacturing or global workforces, but it is much more. Outsourcing is an efficient way to manage special projects or overflow, expand staffing resources, and grow your business without the related increase in overhead and vacation pay. Many businesses outsource critical business tasks that require specialized knowledge such as bookkeeping, marketing, customer service, and sales.



Outsourcing is an effective way to manage business critical functions without incurring the expense of full time employees. Overhead costs are kept down. There's no office drama between two competing employees.

"But I'm so small it's cheaper for me to just do the work myself" is the common objection of many small business owners. However, what they don't realize is that it's actually a better use of time and money talent to outsource. In a Fortune 500 company, you are unlikely to find the CEO working in the mailroom or the Administrative Team putting together quarterly forecasts. Companies hire people to do specific jobs based on their expertise. Each employee contributes to the success of the organization by performing their specialty.



Every business must manage a budget and no one has infinite resources. But your budget is more than the tangible dollars in the bank; it’s also the value of your time. And the amount of focus you spend on revenue-generating effort. As a business owner, if you spend 15 hours per month on bookkeeping you have taken 15 hours away from other activities. Consider this example from a solo entrepreneur:



20 billable hours per week at $100 per hour = $2000



10 non billable hours per week (which might include bookkeeping or administrative work) worth $45.00 hour = $450



If the entrepreneur outsourced the non-billable tasks he or she would gain 10 more billable hours or $1000.00. Even after paying $450.00 for outsourcing, there is a gain of $550.00 and they are no longer burdened with a detail-oriented task that they might not be skilled at.



In addition to the financial gains, outsourcing provides a peace of mind that the task has been expertly managed.

In your business, are there non-revenue-generating tasks that you're doing simply because you've always done them or because you've thought that you couldn't afford to hire someone else to do them? You don't need to hire an employee, but you can hire someone else to do them and you'll earn more money doing things that you probably enjoy more!

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Article Tags: administrative team, administrative work, billable hours, bookkeeping, business owner, business tasks, critical business, critical functions, fortune 500 company, infinite resources, mailroom, office drama, overhead costs, quarterly forecasts, small business owners, solo entrepreneur, staffing resources, time employees, use of time, workforces



Related Forum Posts
Re: What is your biggest challenge? Today? - Outsourcing and time management, but I'm continually making progress.
Re: Should a start-up outsource early? - Hello and welcome to the forum! I agree with Ideasuniversity. Outsourcing is a good way to leverage your time, provided you keep within your budget! Best wishes, David H
Re: Using PR in the Franchise Business - Outsourcing in any business can be a good thing, provided you can afford it and do your due diligence on the company that you outsource to. It is very easy to be taken for a ride if you don't know what you are doing. MichelleJ
Outsourcing - I'm with Louis on this one. By outsourcing you can bring in experts to handle the things you are not good at with a much lower price tag than if you brought someone on full time. Outsourcing is also a way to transition from being a solo-preneur to having staff - you don't have to bring on a salaried worker right away.
Re: In-House or Outsource? - You can outsource a lot of things. Join elance.com for free and they will send you an article on 101 things you can outsource. Outsourcing majority of your tasks make you work smarter. I read that Bill Gates bought the ms dos from someone for $50,000. Now he made billions out of it. This is the beauty and power of outsourcing.


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