Outsourcing Key Business Functions Can Increase Profit: Here's How As businesses grow, keeping up with increasing demands can be difficult. That’s why outsourcing key business functions can be such a valuable strategy. By outsourcing tasks that are either too...
This story originally appeared on Due
As businesses grow, keeping up with increasing demands can be difficult. That's why outsourcing key business functions can be such a valuable strategy.
By outsourcing tasks that are either too time-consuming or too cumbersome to perform in-house, companies can free up resources to focus on more important tasks. As a result, overall profits may actually increase.
From product development and marketing to customer service and payroll processing, it takes a team of dedicated professionals to keep business operations running smoothly. But what would it look like for your business or organization to cut costs by outsourcing some key functions?
Not sure which functions to outsource? Here are six key business functions to consider outsourcing. Choose those most likely to increase your profit margin.
Core Business Functions to Consider Outsourcing
Not all business functions or positions can be outsourced, just as not all people can be replaced. However, there are many tasks that can be taken on by outside help. These suggestions differ by business, but here are some options to consider:
Human Resources is a core business function that helps ensure an organization has the right people to achieve its objectives.
However, it can also be a time-consuming and expensive process. This is particularly true when you use those employees for recruiting, administering, and training new employees. As a result, many organizations choose to outsource and automate their human resources functions.
A recent study revealed that businesses that outsource some or all of their HR services to an HR outsourcing firm or a professional employer organization reduce their administrative costs by approximately $450 per employee.
These costs can obviously quickly add up, especially for businesses growing at an accelerated rate.
Fortunately, outsourcing allows business leaders to focus on their core business activities. At the same time, they still have access to expert HR advice and support. Things like content management, project tracking, compensation management, e-signatures, and automated onboarding documentation can allow your new employees to onboard themselves at their own leisure.
Account Payable Management
When small business owners outsource their account payable processes, they look for more than just a company to manage invoices and payments.
In today's business world, account payable outsourcing providers offer many services that can provide real strategic value for their clients. From automating the invoice capture process to integrating with enterprise resource planning systems, account payable outsourcing providers can help businesses reduce costs, improve efficiencies, and gain better visibility into their spending.
In addition, by leveraging the latest technology, these outsourcing providers can enable businesses to take advantage of early payment processing discounts and improve their working capital position. For all these reasons and more, account payable outsourcing is increasingly becoming a strategic option for businesses of all sizes.
Marketing and Public Relations
Marketing can often be seen as more of a nebulous term, encompassing different responsibilities for different businesses and organizations. And running effective marketing efforts for your business almost always encompasses a plethora of different tasks. There is content creation, campaign management, tracking results and metrics…the list goes on.
Marketing software programs can automate and schedule various tasks, such as content creation, chat services, inbox management, social media posting, and email marketing. And when everything is organized and running smoothly, you can better measure your results and make adjustments as needed to ensure that your campaigns are as successful as possible.
When done correctly, marketing and PR campaigns can help raise awareness of your brand, build customer loyalty, drive sales, and ultimately, increase profit.
Marketing budgets don't need to wreck profitability.
You'll need to consider your budget carefully and make sure that you have the resources in place to support a successful marketing and PR campaign.
If you don't have the time, staff, or financial resources to have an in-house marketing and PR team, it's worth the investment to find help elsewhere. Then, if you take the time to do your research and plan ahead, you can find a way to outsource your marketing and PR that works for your business.
Choosing to work with an outside marketing firm means that you'll have a team of creatives. They can develop innovative campaigns that will capture the attention of your target market. This also helps free up time and brain power for your internal team.
And because outsourced staff are not employees of your company, they can provide an objective perspective that can help identify areas where your company could improve its image or messaging.
Many business owners understand how important it is to run payroll accurately to avoid any operational hiccups, but keeping track of it all takes time and effort. And as your team grows, so does the complexity of making sure employee payroll taxes are withheld properly and that documents, such as Form 941, get filed each quarter.
That's why outsourcing your payroll processing (or using cloud-based software) can be both a lifesaver and a timesaver. Either option takes most of the heavy lifting — such as administrative and compliance elements related to employee compensation — off your plate.
Furthermore, a few service providers even offer access to online tools like a payroll tax calculator, which makes it simple and stress-free to withhold the correct amount of taxes from your employees' paychecks.
The takeaway is that outsourcing payroll processing (or using a reliable software provider) saves you and your employees time, making everyone's lives a little easier.
Information Technology and Systems
IT support is another function that is commonly outsourced, especially for small businesses that don't have the ability to hire or manage an in-house IT staff.
Companies often choose to outsource IT tasks for a number of reasons. First, it can take time and effort to hire qualified developers and IT specialists. By outsourcing these functions, companies can avoid the trouble and expense of recruiting and training new staff.
Additionally, outsourced IT firms can often offer more comprehensive services than in-house staff. They have the resources and expertise to handle a wide range of IT tasks, from developing custom software to managing complex networks.
Rather than spending the time and money it takes to train a new employee, outsourcing can provide an expert quickly to solve necessary IT issues.
Many business owners quickly realize that they need more time or organizational skills to handle all of the administrative tasks associated with running a business. This can include scheduling appointments, customer support, and other various communication tasks.
While some part-time or full-time employees can handle these duties, others outsource these responsibilities to a virtual assistant. Virtual assistants are usually independent contractors who work remotely, often from their homes.
Outsourcing administrative tasks in this manner is a rising trend. Research shows that the market for smart virtual assistants is expected to be worth $52 billion by 2028. That's a compounded average growth rate of 28.5%.
VA's typically charge anywhere from $10 to $85 per hour, based on the scope of work and their experience level. For many business owners, investing in a VA is the best and most convenient way to delegate administrative duties.
What You Should Know Before Outsourcing Business Functions
While outsourcing probably sounds fantastic at this point — and it is — there are still some important aspects to understand before delegating tasks. Here are five common things you should know before outsourcing your business marketing functions:
- Make sure you clearly understand what you're trying to achieve. Outsourcing is only successful if it helps you reach your specific goals. Try to be specific and focused.
- Do your research and choose the right provider. Not all outsourcing companies are created equal. Make sure you select one with experience in your industry and a good reputation.
- Clearly define the scope of the project. You should also clearly understand what tasks you will outsource and your performance expectations. You and your provider should have a shared understanding of exactly what will be delivered and when. This will help ensure a smooth transition and avoid any misunderstandings down the road.
- Be prepared to manage the relationship. Even though you're outsourcing, you'll still need to be involved in the day-to-day management of the project.
- Have realistic expectations. Outsourcing can be a great way to improve your business, but it's not a magic solution. Be realistic about what it can achieve, and don't expect miracles — at least not right away!
How Outsourcing Can Reduce Costs and Improve Productivity
Outsourcing certain key business functions to other companies or individuals can help businesses save money.
When others can perform tasks more cost-effectively or efficiently than you or your employees can, outsourcing is a great financial decision. Here are some advantages of outsourcing:
Cuts Costs On Training and Recruitment
Outsourcing can help you save money on training and operational costs.
Since the outsourced company or employees will already have the necessary skills and experience, you won't need to spend as much time or money training them. Turnover is one of the most costly expenses in business, partially because training takes time and money. Outsourcing reduces those costs.
Saves on Investment Costs
Hiring in-house staff requires a significant investment in terms of training, salaries, and benefits.
In June 2022, the U.S Bureau of Labor Statistics reported that employer costs for civilian workers averaged $41.03 per hour. However, wages only contribute to about 69% of that number. Benefit packages made up the remaining 31% of total compensation.
Outsourcing can help you save on those extra costs while still working toward business goals and objectives.
Helps You Achieve Faster Results
When you outsource a key business function or even busy work, you don't need to invest in training your employees to do that job.
Typically, that also means you don't need to spend as much time explaining requirements or supervising work. You can hire someone who is already an expert in that area and expect quality results the first time.
Take hiring a freelance writer for instance; rather than teaching your team AP Style for your website's copy, you can hire someone who has the book memorized. You save time and so do your in-house employees.
Outsourcing can often lead to higher profits margins and give organizations and business leaders more time to focus on their core activities. Outsourcing key business functions allows organizations to focus on their core competencies and leave the rest to the experts.
Remember, it's important to choose reputable and experienced providers that meet your business-specific needs. Before deciding whether or not to outsource any tasks or functions within your own business, weigh the potential advantages and disadvantages carefully to ensure that it's the right decision for your company.
The post Outsourcing Key Business Functions Can Increase Profit: Here's How appeared first on Due.