“Outsourcing” is a convenient buzzword these days, but I’ve found most business operators are reluctant to do it. Maybe it’s because of discomfort with not having control of a process or not wanting to upset current personnel, but outsourcing back-office functions can be a smart business move.
Particularly in the current age, with so many workers displaced from corporate America, there are many talented individuals who have set up their own “shops.” Whether it’s accounting, marketing, sales, service, administration – even CFO services – you can find someone to do just about any job for your organization, affordably, without “employing” them.
Some Advantages
Cost. The competition to provide services for your company is fierce. When you add up the cost of wages, payroll taxes, and benefits, you can probably find someone independent who will do it for less than an employee. Having said that, there is no “bottom” when it comes to the lowest price provider. There will always be someone who will do it cheaper, but you may get what you pay for.
Expertise. In a small business, staff members must be “jacks of all trades,” who are good at a wide variety of tasks. To the extent you can engage true experts, isn’t that preferable?
Efficiency. An independent contractor will work at his or her convenience. That may be at odd hours, but it is likely to be uninterrupted and dedicated to the task at hand. Oftentimes, in a small business, there is so much going on that it’s difficult to focus on a single task.
More Advantages
Quality. An independent contractor knows he or she works at the business owner’s whim. If you’re not happy with their work, you’ll find a replacement without any of the drama that comes with terminating an employee. With that backdrop, the contractor will be quality-driven to provide great value to your business. Are your employees always so driven?
Control. Perhaps the most powerful value of outsourcing is the control it gives you to adjust to different business conditions. At an extreme, you can virtually eliminate your overhead, incurring expenses only when you have revenues to offset them. In a severe business downturn, you will have the flexibility to control your bottom line. Priceless.
When it comes to outsourcing back-office functions, there is no “one-size-fits-all” solution. I’m not suggesting you outsource everyone, but there are organizations that do it very successfully. It really depends on your needs, your structure, and your goals. These are things worth thinking about.
Compliance
Keep in mind there are compliance issues to outsourcing back-office functions. You can’t simply deem someone to be an “independent contractor” because it’s convenient. The job duties must be consistent with the legal definition – a topic for another day.
Dan Weiss, founder and President of Counterpart CFO, leads a team of flexible, part-time CFOs specializing in nonprofits. To read more from Dan, follow him on LinkedIn or subscribe to his blog at www.counterpartCFO.com.