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Thinking of Outsourcing for Your Startup? Here are the Pros and Cons

Outsourcing does not only reduce the company’s expenses, but more importantly, it helps your small business grow.

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BY Jared Carl Millan - 21 Sep 2017

Outsourcing for Your Startup

PHOTO CREDIT: Getty Images

In recent years, outsourcing has not only become an option for businesses both big and small. It has almost become a necessity — thanks to the power of the Internet and the borderless (digital) world it has helped create.

Outsourcing does not only reduce the company’s expenses among other benefits. But more importantly, it helps your small business grow.

In an Inc. story, Ed Reeves, director and co-founder of Moneypenny, says, “Growth — and that's the ultimate goal for any business — can only be achieved when you're free to focus on the things that drive the biggest ROI.

"Creating new products, developing your service, improving your scalability...those are efforts definitely worth your time. Taking care of paperwork, sorting out payroll problems, making sure your website is SEO optimized, or designing an advertisement are not.”

Therefore, it becomes crucial that you, as an entrepreneur, focus on matters that are important, and one of the many things you can do to save time, otherwise spent on unnecessary matters, is to outsource certain tasks.

Reeves said that outsourcing is especially useful for these four things:

1. It frees up capital for growth.

“By converting fixed (and often sizeable) outgoings into variable or smaller costs, outsourcing frees up cash to be used elsewhere.”

2. It allows you to focus on your strengths.

“I hate doing accounts,” Reeves admits. “So one of the first things I did when I founded Moneypenny was to hire an accountant, someone who loves sifting through spreadsheets and sorting out figures…As an entrepreneur, I am most useful to my company when I focus on the activities that will make it grow. To do that, I need time.”

3. It connects you to experts instantly.

“Whether you're a start-up; a small business; or a sole trader, there will surely be tasks you need help with on a one-off or part-time basis — like designing a new website or coming up with a successful marketing campaign, or payroll, IT, or customer service,” he says.

4. It offers flexibility.

“No two small businesses are the same, yet the one thing they do have in common is the need to be flexible because things can — and often do — change quickly,” Reeves says.

What about the cons?

For entrepreneur Steve Feiner, CEO and founder of Singapore-based start-up A Better Florist, the matter of outsourcing poses many challenges.

“Outsourcing, in general, is complicated,” he says. “We have outsourced a ton of different roles with varying results. In general, with management, there is a feeling of comfort being able to see your employees work. And when outsourcing, [which is] similar to working from home, that comfort is just not there.”

Moreover, it’s also necessary that you maintain some focus on it. “Outsourcing also does not work when it is just left alone,” Feiner adds. “While the outsourced employee probably does not require the level of management of a full-time employee, clear goals and expectations must be set and managed too.”

And then, there are also other matters to take into serious consideration.

“The challenges of outsourcing manpower might include potential redundancies for your organization, the lack of customer focus or care to detail from the manpower outside your organization, the loss of control on some of your organization's confidential information, etc.,” says Robinson Blanckaert, founder of start-up UShift.

Feiner says, “When looking at outsourcing, it is imperative to understand how important this area is to your business, what is to be gained or lost based on the outsourced relationship, and finally, if the existing management in place can handle the change.”

Outsourcing clearly has its advantages and disadvantages. No matter what kind of business you own, if you understand its power and use it as a tool for growth, then you will have greater chances of thriving in this competitive and cutthroat world.

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