A Guest Post by Megan Nichols
At some point, many small businesses experience sudden growth that they can’t handle. As a result, they may need to hire new workers — then deal with the weeks it can take to bring on additional staff. A high enough level of demand may also make certain tasks — like manufacturing or printing — completely impractical, especially if a business wants to keep them in-house.
It can seem like there’s nothing to do — except keep working at a slow pace. There’s another option, though. For most tasks — like IT, customer service and manufacturing — you can outsource the work and team up with a business specializing in handling these processes. Here are some of the major outsourcing benefits.
1. Outsourcing Lowers Labor Costs
Hiring talent is an expensive and time-consuming process. On average, it takes a little more than 23 days to screen, interview and hire a candidate. During this time, you won’t have the labor you need to scale up operations. This situation can cost you big in lost time — and that’s without considering the price of training and onboarding that new employee. While it’s possible to expedite the hiring process, this can cause other problems. You may miss out on talented candidates or hire an employee who’s not right for the position.
When you outsource labor, you have access to skilled workers right away. You also won’t need to cover payroll taxes or health benefits of these contract workers.
If you’re working with an established business, these contract workers will typically be experienced and have worked for a while in their position. As a result, you may not need to spend as much time waiting for a worker to get up to speed and settle into the role. Worst-case scenario, a contract worker isn’t a good fit for the position, and you can request another one or switch businesses.
2. Outsourcing Lets You Specialize
Sometimes, small businesses will slow down their growth by trying to do everything at once. This scenario is especially true, for example, of tech businesses that need a lot of computer storage and processing power. Eventually, if demand for your service gets high enough, these businesses face a choice. They can either massively scale up their hardware and hire staff to help keep it running — or they can outsource that storage and focus on what their business does best.
For each thing you outsource, that’s one less to-do to worry about. This setup can help both your overall business and your workers hone in on what they’re good at.
3. Outsourcing Gives You Access to Expert Knowledge
A qualified business with experience in handling outsourced labor will have experts who have just about seen it all. For example, if you want to keep your manufacturing in-house, you may eventually have to upgrade to different machines that can handle a larger volume of orders. Once you upgrade, you may also have to learn how to handle the different, unique problems these new machines have.
One of the biggest benefits of outsourcing is the instant access to first-rate production quality and expert knowledge. If an issue crops up, you’ll be in contact with skilled professionals who can quickly identify what went wrong and help you resolve your problem.
4. Outsourcing Helps Your Business Adapt
The less equipment and staff you keep on-site, the quicker your business can change its workflows. When your business plan changes, machines will need retooled, programs adjusted and processes adapted for new circumstances. If you outsource, many of these resources are off-site — meaning you won’t be bound up by purchases you’ve made in the past.
If your business needs to quickly adapt to a method kind of printing, for example, you won’t be limited. You won’t need to purchase any new equipment, retool or train employees in the new way of doing things.
Tips for Outsourcing
Outsourcing doesn’t always go perfectly — but you can use these quick tips to help your business out. When choosing a business to partner with, look for one with experience that’s highly relevant to your needs and practices. Not all manufacturers, for example, are going to be equipped to handle your business’s needs. Some may not have the right experience or machines to create the specific parts or processes you need.
Try to also select a business partner with a track record of strong communication and customer service. Recommendations from business peers can help you with this.
When building your strategy for outsourcing, you should avoid some common pitfalls. For example, don’t assume that your partner company can fix everything on their own. You should also prepare for an extensive vetting process. Outsourcing isn’t a band-aid fix, and partnering with another company will likely mean establishing a long-term relationship. Getting the right company will be key.
How Your Small Business Can Handle Outsourcing
Outsourcing can yield some serious benefits for small businesses, especially those struggling to scale up to meet increased demand. There are some pitfalls every company should be aware of, though. In general, however, outsourcing is an effective strategy for businesses that want to reduce labor costs and quickly adapt to changing circumstances.