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How Outsourcing Is Changing Small Business Profitability
Posted by Cameron Francis on August 03, 2015 in Small Business

How Outsourcing Is Changing Small Business Profitability

In the past, outsourcing was in the exclusive preserve of big businesses. This was largely because they had the resources to farm out the activities to other companies or countries and coordinate effectively with them without losing productivity or efficiency.

These days, with the internet, easier communications and the proliferation of thousands of tools, outsourcing has become much simpler and can be used by pretty much all small Australian businesses.

In fact, the 2012 Australian BPO Report indicates that 45-65 percent of all Australian businesses outsource parts of their operations like human resources, printing/document management, accounting, online marketing, CRM and finance.

It doesn’t matter if the business activity is mundane or part of their core operations, these tasks are often sent to workers remotely or another agency. Many companies including large behemoths such as Apple and IBM and small businesses like Envato, Airtasker and Invoice2Go actively outsource parts of their operations to other firms on a consistent basis.

Why Outsource Instead of In-House Units?

There are many advantages to outsourcing some of your business processes to specialist organisations. The reality is small businesses often have limited budgets and may be unable to afford having internal units working full time. This is where outsourcing becomes important.

Focus on Business Growth

While owning a profitable business is good, there’s always room for growth and improvement. In the life of every small business, there’s always a point where growth becomes essential or the business stagnates or dies.

Now, when the time comes, doing the same routine or menial tasks –mostly administrative- can become a dead weight that slows you down and truncates the growth of that business. As a business owner, your goal is not to just work in your business, it is also to work on your business.

So, as much as the daily routine activities play a critical role in keeping the business running, business growth comes faster by having some other specialists handle certain aspects of your business. Doing this frees up your resources and time to implement growth strategies without stretching yourself too thin.

Improved Core Business Activity

Business growth is often directly tied to working on the business’ core processes and objectives while shedding the “dead weight” or unnecessary processes.

For instance, a Melbourne dental practice that concentrates on offering quality patient care and cutting edge dental procedures is more likely to become a leading practice if they devoted more resources to doing just that whilst farming out their marketing to top digital marketing agencies in Australia.

This is how to achieve not only balance, but also become better at being an excellent dental practice.

Better Control of Business Operations

Most small business owners often wear many hats, particularly when they are a one man operation. At one time or the other, they often have to double as the CEO, accountant, publicist, marketer and customer care guy.

This is a lot for one person to do seeing as there’s only so many hours in the day. Multi-tasking like this may be fine for a while, but as soon as you start getting more orders, calls and revenue coming in, outsourcing some of those operations helps make things easier and gives you e better handle on your business operations.

Perfect for Temporary Tasks

Many organisations often have quite a few temporary or seasonal processes. Others have businesses that are seasonal in nature. The processes involved in running these albeit important tasks may not be needed for the entire business year.

Outsourcing these processes is often a good idea because you won’t have to keep paying staff for doing nothing when these tasks aren’t necessary. You can easily get the manpower to take care of that when the time is right and let them go when you’re done without any hard feelings.

For example, accounting departments may often find themselves short-staffed during tax season. Outsourcing some of that work will ensure that all deadlines are met at reasonable costs.

Encourages Speed and Scaling

Business growth often means the need for speed, scaling up, faster order fulfilment and deliverables, more customers, increased staffing, bigger office space and lots of time spent on vetting, hiring and even training the right candidates.

When you have lots of orders to fill and want to expand your market reach, spending time and resources vetting and training talents is not a luxury you can afford. When customers need something, they want it as soon as possible.

Outsourcing some of those operations –particularly those you cannot handle or have the resources for- means effective scaling and growth, faster deliverables, more efficiency and overall productivity.

For example, small businesses specialising in fast moving consumer goods would be better off sourcing their products from manufacturers who can produce them faster than producing the items themselves.

Cost Savings and Lower Expenditure

Translation: increased profits. Outsourcing allows an organisation tap into technologies, skills, talents and output that they lack in-house for a fraction of the normal costs.

Organisations are becoming increasingly more efficient at cutting costs without lowering product and service quality. As a result, they are spending less money for the same processes if they had hired staff to do it internally, and they are getting the same, if not better results.

Competitive Edge

To quote former GE CEO, Jack Welch, “Globalisation has changed us into a company that searches the world, not just to sell or source to, but to find human capital – the world’s best talents and ideas”. This is what outsourcing does.

Thanks to globalisation, small businesses can go out and locate the world’s best talents and get them to work on their business remotely. And the fact that they specialise in that particular field or discipline helps give them the necessary competitive edge against rival businesses.

Globalisation and rapidly disappearing business borders have levelled the playing field. Small businesses are better able to compete against, ensure profitability, and annihilate their competition by hiring specialist organisations and talents from all over the world.

Outsourcing has made this possible. In fact, all small Australian businesses would do well to start outsourcing some of their processes to leading agencies and professionals. This is particularly important when it comes to online marketing.

The online marketing industry which is set to grow at phenomenal rates in the next few years is capable of giving all small businesses incredible market reach.

Smart and forward thinking businesses could benefit from this huge, untapped marketing medium by outsourcing their online marketing to reputable and leading Australian online marketing firms like eTraffic. Let’s see how we can help your business grow. Get in touch with eTraffic Web Marketing today on 1300 887 151.

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Cameron Francis

Co-Founder

Cameron Francis is the CoFounder & Managing Director of ETRAFFIC, Melbourne's #1 Creative & Digital Marketing Agency. For over a decade Cameron has been providing growth marketing and digital strategies for over 2,000 small businesses, start-ups & entrepreneurs around the country.
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