Build a Better Business with Outsourcing

A comprehensive guide on the what, when and how to outsource.
By Nancy Mann Jackson   |   January 16, 2010

When Laura Lee Sparks left her job as a law firm manager to launch her own business, she knew from the beginning that there were certain tasks she didn't want to handle. The owner of Legal Marketing Maven - a firm that helps law firms streamline their practices through outsourcing - Sparks practiced what she preached from the start, hiring an outside bookkeeper and slowly adding to her virtual team of contractors. Within months, her business revenues reached six figures.

"Most entrepreneurs have great talents but many times they think they can do it all," Sparks says. "That can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income." Entrepreneurs have long seen outsourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small businesses - and for some small firms, outsourcing has made a powerful impact on their growth, productivity and bottom lines.

"More small businesses are outsourcing tasks these days because technology has advanced to the point of professionals being able to work from anywhere in the world, coupled with the availability and accessibility of extremely qualified professionals who have decided or been forced to leave the corporate world, [such as] virtual executive assistants, marketing directors, graphic designers, transcriptionists, paralegals, web designers, HR consultants, bookkeepers, PR directors, IT specialists, and the list goes on," Sparks says. "These freelancers come on board as subcontractors and save the small business owner the burden of paying overhead associated with payroll taxes and expenses such as health insurance and worker's compensation, as well as the space constrictions that growing a company in-house can present."

Taking the first steps toward outsourcing can be time-consuming, but figuring out how to build your business with help from outside professionals can offer increased efficiencies and economies of scale. "Progressive entrepreneurs realize the unstoppable power of outsourcing to handle aspects of their business that are essential but simply don't make sense for them to deal with personally," says David Walsh, entrepreneur and author of Source Control, an e-book on effective small business outsourcing. "Small business, augmented by a global pool of human capital, can compete directly with the biggest players in their space, and win."

When to Outsource

For every company, the right time to outsource is different. Some businesses have in-house staff to handle daily activities, but may need outside help to undertake new projects that don't warrant another full-time employee. When you and your current employees are unable to manage the day-to-day business of your company and build the business satisfactorily, it may be time to consider outsourcing. For Tonya Thomas, president of The Small Office Assistant, the right time was when she realized that although she wanted her business to grow, she had no time left in her day to pursue that growth.

"At first I felt like I was the only person who could do the work efficiently; I wanted control over everything," Thomas says. "But I wanted my business to grow and in order to do that I had to let go and start delegating." Letting go paid off: The first year she began using contractors to help carry her workload; Thomas doubled her company's revenue.

For very small businesses, Sparks recommends outsourcing from the very beginning. She suggests starting out with a bookkeeper and a virtual assistant, and growing the team from there. In her own business, Sparks now contracts with a virtual bookkeeper, a web designer, a ghost writer, a graphic designer, an executive assistant and a project manager.

What to Outsource
Chances are you're already outsourcing some business tasks, such as payroll administration or background and criminal checks for employment. And these days, almost any task can be outsourced, with so many qualified professionals leaving the corporate world to work as freelancers or contractors. However, just because you can outsource a task doesn't mean you should.

"Don't outsource something just because you don't want to do it," says Jim Lanzalotto, principal at Scanlon Louis, a marketing and strategic outsourcing company. "Sometimes there are things you don't want to do but they are important to your core business."

Before choosing which tasks you can farm out, take a hard look at your business and determine your strengths and values. "Small businesses must identify their core competencies and capabilities and focus their own R&D, talent management and resources on being the best in their industry at these," says Marc Resnick, Ph.D., a small business consultant and director of the Institute for Technology Innovation at Florida International University. "Outsourcing any aspect of [these tasks] would be a big mistake because they would cease to offer anything that their own customers couldn't get elsewhere. So a small business that focuses on product design should not outsource anything related to developing its internal design talent or their design activities. But they should investigate all opportunities for outsourcing tangential processes like payroll services, IT and so on."

The types of tasks that are best outsourced fall into three general categories, according to Gregg Landers, director of growth management at CBIZ MHM, the nation's eighth largest accounting and business services provider. They include:

Highly skilled, or executive, expertise. For example, you may not need to pay a CFO's salary, but you could have a CFO-level person to come in a few times each month to provide financial analysis and ensure that the bookkeeper is handling the books well, Landers says.

Highly repetitive tasks. Accounts payable, data entry and shipping inventory could fall into this category.

Specialized knowledge. "An example might be the IT support for your accounting system or your network," Landers says. "You may not be able to afford or need a full-time IT person, and it is easier to change to an outsourced provider with the right skill set as your IT needs change."

Counting the Cost

So what can you expect to pay a contractor for allowing you to rise above day-to-day tasks and build a better business? It depends on the type of work you're buying, the skill level and location of your provider, and your own preferences.

"'You get what you pay for' is true, wherever you go in the world," Walsh says. "Always pay someone what they're worth, regardless of location but accounting for and leveraging currency differences that often work in your favor. Place value on outcomes over hours. If you don't get the outcome you need, it doesn't matter how much time your contractor spent along the way. Consider distinct task-based agreements while you're evaluating new providers, and transition to a fixed-cost retainer once you're confident in their ability to consistently deliver."

Reaping the Benefits

Although there are risks, outsourcing ultimately offers business owners great advantages. The process allows you to build a team of skilled professionals without adding the expense of full-time employees, and to avoid getting bogged down with tasks that can be completed without your attention, Sparks says. It's an affordable, proven strategy for growing your business without letting it take over your life.

"Handing off work forces you to objectively, ruthlessly and systematically consider your activities and the steps taken to perform them," Walsh says. "Defining a process flushes out inefficiency."

When you outsource, you can focus your time, attention and resources on your company's core competencies--and spend your time setting new goals and finding ways to achieve them.

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The Benefits of Outsourcing for Small Businesses

Outsourcing — the practice of using outside firms to handle work normally performed within a company — is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution, and many other important functions — often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies' outsourcing needs. 

But not many businesses thoroughly understand the benefits of outsourcing. It's true that outsourcing can save money, but that's not the only (or even the most important) reason to do it. As many firms discovered during the outsourcing "mania" of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. The flat economy caused many companies into huge layoffs and subsequently outsourced functions that were better kept in-house. Wise outsourcing with Life Balance Back Office Services, however, can provide a number of long-term benefits: 

Control capital costs. Cost-cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you're able to pump more capital directly into revenue-producing activities. 

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage. 

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most. 

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult. 

Focus on your core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly. 

Level the playing field. Most small firms simply can't afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act "big" by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy. 

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise. 

Benefits Of Outsourcing Bookkeeping

Bookkeeping! For most people the word alone can be stressful. Many business owners take two common approaches to tackling the issue of bookkeeping.

• They try to do it themselves - which is time consuming and can lead to costly mistakes.

• They pay large firms to do it - which is just too expensive.
So what is the alternative? Outsource!

Outsource?
Yes - now you can outsource your bookkeeping work to  Life Balance Back Office Services, a professional bookkeeping service with the skills and experience to do the job right.

Outsourcing itself is not a new business concept and companies have been doing it for years. However, many companies are not familiar with the growing area of outsourcing their bookkeeping work. As companies look for ways to survive tough economic times, outsourcing looks to be the most practical way to help streamline cost and effectively allocate money where it is needed.

How Does it Work? Start by gathering all the documents that are needed, i.e. invoices, receipts, deposit slips, bills, etc. Then once a week or so send them off to Life Balance Back Office Services via fax, email, UPS or even regular mail.

Then, Life Balance Back Office Services is able to enter your transactions, reconcile your accounts, set your bills up for easy payment and generate regular, easy to read reports. In a properly designed system, a bookkeeper only takes over the process of tracking transactions such as sales, accounts payable and balancing the books. Only the business owner makes management decisions. With on-line bill pay, the owner has the final word on who gets paid and when.

Suddenly your bookkeeping gets done faster, more efficiently and a lot less expensively than ever before and you now have complete and up to date books with reports of sales, profits and cash on hand right at your fingertips. But best of all, this can all be done for about half of what a bookkeeper costs as a full-time employee.

Now you can focus on your business and not on work you shouldn't be doing.

What are the Advantages?
There are many advantages to outsourcing your bookkeeping work with Life Balance Back Office Services. Here a just a few...

Save Money - The number one benefit is the cost savings involved with outsourcing. During times of economic stress, everyone is looking for ways to save money. Did you know that outsourcing your bookkeeping can save you over 50% of the cost of hiring and training a full time employee? When you outsource your finance needs you work with trained professionals for a lower cost while not worrying about increased costs involved with employee benefits and insurance. Small business owners and professionals are discovering that outsourcing bookkeeping saves payroll and overhead costs and it's a giant step in freeing up valuable time.

Save Time - Bookkeeping is a time consuming and tedious job and it's not for everyone. As a business person, your time is better spent on important matters that will save your company money and bring in profits. Outsourcing this side of work will provide the most efficient use of your company's time. For many business owners, just the effort of hiring, training and managing a bookkeeper can take many hours - and if you're doing the books yourself the number of hours is even greater. As a business owner your time is best spent doing what you do well - working with customers.

More Marketing - The amount that you save with outsourcing your bookkeeping work can be put into marketing your business to gain more customers and more visibility in your market. Getting exposure is the most important and sometimes the most costly part of any business. So why spend money where you don't have to?

Best Tools - Best Talent - Life Balance already has the technology and tools in place that can be costly to a business owner. Outsourcing gives you the advantage of having these premium tools for your business while paying a lot less. You also have access to a higher caliber skill level and knowledge base than you might be able to afford in an employee - not to mention the cost of training.

Extra Help When Needed - During peak times of tax and company financial reporting, things can get very busy. When you feel like you need more people, having a bookkeeping partner is a great resource. Outsourcing firms can add employees to your account without any operational costs to you.

Still not convinced? Give Heidi  a call today to learn more about the services Life Balance Back Office Services  can offer or write her an e-mail!

The Importance of Developing a Work and Life Balance

Failing to balance your work and home lives, it seems if you do not, everything seems to go wrong. If you spend too much time at work you begin to neglect your family and other responsibilities, but just the same is said if you spend too much time at home then you are not providing at stable flow of income for your home life due to slacking off when it comes to work.

These are the challenges that are faced by most people today. If I work too much then my kids are not going to know their parent, if I don't work enough then I cannot provide for said child. This concern is a great one among people and they all strive to balance their lives with their work and it seems that is easier said than done.

I believe that most people focus in on their work nowadays rather than their families and their justification for that is that they want to be able to make enough money so that they and/or their children can live better lives than they had while growing up and this is understandable. There are those that feel spending more time living your life rather than working towards something is ridiculous and I partly agree. The downfall of working too much has already been stated, but the downfall of the person who lives their life and doesn't focus work has many of the same problems. Too much life and not enough work leads people into depression and the feeling of no self worth if they do not apply themselves at work.

One thing you can do to change is if you do have a family (spouse and/or children) schedule some vacation time in and take your family out for a fun filled weekend. You could make every night family mealtime, where you and your family sit down and discuss your days and eat a good meal together. This reaffirms your place in the life of your family and doesn't leave feeling like all you do is work all the time. You could institute game night and let each member of the family pick a different game each time so that every person feels like they are part of your life.

De-Stress -- Even When Your Life Is Full of Stress!

The kids are in class, after-school activities abound, and you've become an unglorified taxi-driver, homework helper, main liaison to the school, chief cook, and bottle washer -- and that's just for starters. Let's not forget about your other obligations, such as a job, garden club, or political activism. Yikes! Before you start grasping for a lifeline, take these steps to de-stress your life.

Stop
When panic sets in and you wonder how you will ever accomplish everything you need to do, take a moment for yourself. Sit down. Breathe deeply. Sip tea, hot chocolate, or even coffee. (You'll sit longer if it's hot.) Enjoy a moment of calm. Then begin to focus on what you need to accomplish.
 
Try a list
Even if lists make you crazy, write down everything you need to do. This will help you get everything out in the open and give you a place to start. If you're a notorious list-maker, try organizing your list by category. Finally, as you accomplish your goals, cross things off your list.
 
Re-evaluate your priorities
Once you've got your list, look at all you need to do and put things in perspective. Some tasks require immediate attention, while others can sit on the back burner. Highlight your top priorities and focus on them. Schedule the other things for a later date. By prioritizing your tasks, you'll be able to target your energies in the right direction.
 
Eat healthy food
Eating junk food contributes to stress. Your body doesn't function at peak performance when it's overloaded with chips, soda, and cookies. Try a turkey sandwich instead of a hamburger. Drink lots of water and eat some fruit instead of munching on cookies. Fuel your body with good food, and your mind will do wonderful things for you.
 
Start small
Too often we think we must complete a project from start to finish in one sitting. A better approach is to tackle big jobs in small steps. You can space them out over days, a week, or even a month, depending on how much time you have. When starting out, some people do the hard tasks first and get them out of the way. Others start with something they enjoy, and then they are ready to take on the tasks they dislike. Either way works. Just be sure you get started!
 
Share your stress with a friend
Find someone to talk to about all that you have going on in your life. Vent when things become overwhelming, but share your accomplishments as well. Once you've completed a big task, check in with your friend and report on how you're doing. Don't forget to listen to what your friend has been doing as well. It helps to know you're not alone!
 
Exercise
Even if you aren't a distance runner, your body will benefit from a brisk walk, time on the treadmill, or a rollerblade around the neighborhood. Physical exercise will raise your endorphin level, help you focus more effectively, and make you accomplish more in the long run.
 
Don't try to schedule too much in a day
One of the most discouraging realizations is to end the day and still have a long list of unaccomplished chores. To avoid this, take a realistic look at the time you have available in a day, the time each task takes, and schedule accordingly. If you have a lot of meetings or commitments one day, you simply aren't going to have as much - or any - time to do other things. If you just aren't going to be able to get to a particular task on one day, move it forward to a day that's less busy.
 
 
Source: Adapted from "De-Stress - Even When Your Life Is Full of Stress" published by the Council for Exceptional Children in CEC Today, September 2000.


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