The Value of Outsourcing
For a long time, outsourcing was considered the sole domain of large corporations – but this has changed in recent years. More and more SMEs are recognising that outsourcing is an invaluable tool – not just for cost-cutting, but a wide variety of benefits that give them a competitive edge. By wising up to its full potential, you can equip yourself both to follow the best outsourcing practises, and to position yourself – as a product or service provider – as a desirable outsourced partner.
Large companies have the scale and resources to hire a wide range of full-time staff: from executives to bookkeepers to IT personnel. For SMEs, often consisting of a very small team, this is simply not feasible. This needn’t limit you, however – outsourcing can be a better solution regardless of scale. By outsourcing work, you only pay for what you need. Furthermore, you avoid overheads such as UIF, and save valuable work-site space – often in short supply in small businesses. With reduced costs, you can sell your product or service at a more competitive price.
Focus on your value-creating core
Many SME owners constantly find themselves overworked, carrying the load of several traditional jobs. Some even take pride in carrying the entire firm single-handedly, but it is a strategy that severely prohibits growth. Spreading yourself too thinly removes focus from the core of your business: the key thing that creates value. By outsourcing “non-core” work, you can improve productivity, procure new clients and focus on the road ahead – a necessity for growth that is often overlooked when owners are overburdened with ancillary tasks. In essence, outsourcing allows you to refine your product or service, and business, to its best possible version.
What (and what not) to outsource
When deciding what tasks, projects or processes to outsource, you need to carefully evaluate your business’s value-proposition: what is the key thing your business does, your strengths and capabilities, that customers come to you for? Management, research and development, staff and so on should be handled in-house for this: constantly work to improve it so that you stand out in your industry. On the other hand, anything that is peripheral – essential to your business’s operation but not central to the value you create – can generally be outsourced.
The outsourcing ecosystem
Outsource-friendly work often fall into three broad categories. Executive expertise, highly specialised skills or knowledge, and repetitive and time-consuming tasks. It may be unfeasible to hire a full-time financial executive, but very beneficial to have them oversee strategy and progress from time to time. Similarly, if you only need occasional IT assistance, this is better outsourced as necessary. Finally, vital but time-draining tasks, such as managing accounts receivable, are far more efficient to outsource.
Work in these categories is still critical to the function of a business. “Non-core” does not mean less important, rather it is contextual: what is peripheral to your business will be the core value-proposition of another’s. For a large retail store, the specialised skills and knowledge needed to perfectly stitch a shoe is peripheral – for the manufacturer, it is core. By outsourcing what is secondary to you and positioning yourself as the specialised provider of what is secondary to others, your business can blossom by forming part of an outsourcing ecosystem.
Finding the perfect partner
With modern technology, finding the ideal company to outsource your work to – or to receive outsourced work from – has never been easier. Establishing your own presence through a website and social media is vital: it allows others to find, evaluate and connect with your business instantly – and thus to establish a mutually beneficial outsourcing relationship.
It also means that lines of communication can constantly remain open – something essential to developing trust in a business partnership. This is especially important for long-term, or process-oriented outsourcing: understanding a business partner’s changing needs, or getting to know their client-base, means that strong, durable relationships can be forged.
Financing made easy
Managing accounts receivable can put a huge strain on any business, but especially for SMEs. Maintaining a steady cash flow with credit sales of up to 120 days is challenging on its own, while constantly chasing accounts due can hamper your ability to exert your energy where it counts.
Have you considered outsourcing these processes to a third-party organisation? With factoring, this organisation purchases your accounts receivable, collecting them when they are due – so cash flow worries become a thing of the past.
In addition, when you partner with Merchant Factors, it handles all debtor administration and credit control services – developing an extensive knowledge of your clients and dealing with each one professionally. With the knowledge that your finances are being handled with expertise, you can focus on providing excellence in the core, value-creating work of your business.For fast, flexible business finance – contact Merchant Factors today.
Finance beyond the Numbers.