Business owners tend to attribute their success to strategic spending. They knew when it was sensible to spend a little or a lot of money, often applying the same concept to time and energy. This skill pays off tremendously when business owners are tasked with the decision of whether or not to outsource a project or service. But it doesn’t just come down to money. You must figure out exactly what you must do to ensure that the work is done correctly and efficiently. Many business owners will say the only way to make this happen is to do it themselves. Others will say they wish they could outsource nearly every task.
The realistic answer, of course, is to find a happy medium. Here are 3 questions to ask yourself when you aren’t sure if you should outsource, hire an in-house employee, or simply handle it yourself:
1. Do I stand to lose money if I do not outsource?
Think about how much money you could potentially lose if you chose not to outsource. In most cases, businesses decide to outsource after concluding that taking the issue in-house would add unnecessary stress to their already hectic daily routines. Hiring an in-house employee might cost more than you stand to make (at least in the near future), and handling the work yourself takes precious time out of your day. This is money and time you absolutely need to maintain cash flow or maximize revenue. If you’re exceptionally short on either resource, outsourcing is probably the way to go. You’d have one less thing to stay on top of, and one less expense you might end up regretting.
2. Will outsourcing affect performance?
Out of these three choices – you/your team, a new in-house employee, or an outsourced employee – who will do the job the best? An area in which you or your team have little if any knowledge should obviously either be outsourced or assigned to an in-house employee. When choosing between the two, figure out if the higher cost of the latter option is likely to achieve higher rewards. Not sure? You’ve got your answer right there: outsource. Some business owners will jump right to that conclusion if they don’t know anything about the service in question. Even if they were immediately presented with a pool of in-house candidates, how would they know which questions to ask or how to gauge someone’s capacity to perform?
3. How important is this service all year round?
This is a tough one. Industries evolve, and certain elements of industries become more important. Once you realize that a service is now incredibly vital to your business’s success, it’s never a bad idea to familiarize yourself with that service. This could push you away from outsourcing, unless the service is only a priority during certain periods of the year. For example, seasonal businesses have less of a need for certain services during their slow season. They know they shouldn’t have to pay the same amount of money for something they will only use sparingly for several months.
This is one of the main reasons why it is now more popular for restaurants to outsource delivery services. Demand can surge or drop at any moment in the restaurant business. Outsourcing saves restaurants from having to find dependable in-house drivers at the last minute. Instead of unsuccessfully trying to predict how many drivers they will need for an upcoming season, restaurants can take advantage of delivery companies that only pays drivers for every order they deliver.
4. Am I better off spending more?
If you are naturally biased towards one of the three options, you may be able to work with a business lender that can eliminate the potential downsides. Business owners who like to handle all important things themselves can likely find a small business loan that gives them the means to hire a full-time employee and spend more time on the associated tasks. A financial cushion can be extremely helpful in situations where you wouldn’t see an ROI for more than a few months and would lose even more money after deviating from your typical routine. You could also continue to pay your new hire if business slows down shortly after their recruitment.
Though outsourcing is less expensive, plenty of businesses might have trouble enlisting or maintaining services that will not immediately contribute to revenue. With a working capital loan, business line of credit or merchant cash advance, such businesses can pay off increasing amounts of their debt as their outsourced service begins to finance itself.
United Capital Source has helped dozens of companies maintain a steady budget while outsourcing private services like digital marketing or inventory storage. The main purpose of outsourcing is to save money, and we know exactly how to maximize your savings and grow your profits in the process.