The Importance of Outsourcing in Your Small Business

Outsourcing could mean the difference between success and failure for a small business.

Do not fall victim to the "small business superhero complex." This is what Bidsketch founder Ruben calls it. It is the tendency for many small business owners to do everything themselves. Any business will have a multitude of different aspects that need to be juggled for the business to run properly. Many of these can take business owners unawares. After all, how many business owners start by thinking that they want to sell one specific item, and find themselves in over their heads with the need for accounting, marketing, building a website and social media presence, and a host of other jobs? In fact, Melinda Emerson of Small Biz Lady says, "When you are a small business owner, you immediately take on 10-14 jobs all at once." If this goes on for long, things from many different departments will start to fall behind. Plus, you'll be "working yourself to death."

Concerns that Outsourcing Causes Unemployment

There are many who blame outsourcing for unemployement. This is simply not true. A study by the CPB Netherlands Bureau for Economic Policy Analysis concluded that "the risk of involuntary unemployment has no statistically significant relationship with the general outsourcing variable." In fact, "employees were 32 percent less likely to lose their job if they worked in a firm that outsourced internationally, and 52 percent more likely to lose their job if they worked in a firm that outsourced domestically."

The study points out that businesses that outsource internationally "are able to increase their size and employment." To the same effect, Ben Heineman Jr. wrote in Harvard Business Review: "The imperatives of offshore facilities and employees are – and will remain – central to American companies' international competitiveness." Otherwise, they would eventually simply pack up and relocate their entire operations elsewhere.

When Outsourcing Might be a Good Option

In an article published in Inc. magazine, Michael Alter listed five questions to ask when deciding if you need to outsource:

1. Is the task at hand a primary service or offering from your business?

2. Is there a competitive advantage to do it in-house?

3. Is it a specialized service you don't need to handle full-time?

4. Is it a commodity—something someone else can do better and more efficiently?

5. Are the costs of the service lower than what it would take in time and manpower to get it done in-house?

What Tasks to Outsource

Going back to Small Biz Lady, Melinda Emerson, there are generally five tasks that all small businesses need to do, but need not take more of your valuable time and money. These are bookkeeping, payroll, social media marketing, administrative support, and other marketing efforts.