Running your own business is a good prospect in itself. You get to be your own boss; you work according to your feasibility and expertise and much more. However, what determines the success factor of a business? Is it the level of the profit, operating expenses, number of resources employed or level of experience? Ironically, each attribute plays its own part in determining a business’ success factor. Generally, every business owner aspires for the highest business profits and experience level, coupled with the lowest possible operating expenses and just the right amount of resources employed.
A study conducted by Guidant Financial in 2017 revealed that the highest level of concern for entrepreneurs is access to capital once business operations are underway. According to them, starting a business is still much easier in comparison to running a business in the attempt of keeping their profits afloat. Operating costs for business insurance, salaries, wages, and marketing are just some of the many expenses a business needs to pay on a timely basis. With the progress of time, not only do these costs increase with the increase of resources employed (such as human resource), but much of their increase is attributed to inflation.
According to Statist research, the inflation rate in the USA rose from 2.14% in 2017 to 2.54% in 2018, whereas, according to Macro Trends, the rate of interest increased from 1.25% in 2017 to approximately 2% in 2018. Furthermore, the Bureau of Labor Statistics revealed that while average hourly earnings rose from $26 in January 2017 to $27.1 in July 2018 in the USA, inflation measured in the consumer price index (CPI) increased even faster from 244.75 in January 2017 to 251.1 in July 2018. All this means one thing; inflation is on the rise, the cost of living is increasing, and operating a business is becoming more costly.
Since the rising operating costs of businesses is a major concern, looking for alternatives that will somewhat reduce business expenses is imperative. Luckily, outsourcing the non-core activities of your business can dramatically mitigate your business’ operating costs! While you may allow for the core operations of your business to run their natural course, you can always outsource non-core activities like marketing, advertising, data entry, payroll, accounting, and business analytics and consultancy to specialists for whom these are their core activities. How does this outsourcing benefit you in comparison to overlooking their management directly? It’s simple:
- Outsourcing companies are specialized in what they do
- Internal resources can be freed and relocated elsewhere
- Maximum use of external resources can be made
- Reduced operating costs (since you will only outsource on a need basis, you won’t have to have dedicated specialists hired for an entire year)
- Improved company focus since you only have to concentrate on the core activities of the business
This is precisely why it should be every business’ fiscal plan to outsource their non-core activities. Not only will doing so reduce their operating costs, but it will also give you access to quality work completed as efficiently as possible since outsourcing agencies specialize in the services they offer. This will further save your time too, so you can focus on what you do best by relocating the freed-up resources and deploy them in other areas within your business.
On the other hand, if you choose not to outsource, you will have to hire specialists for each of the non-core activities of your business and pay them regularly, irrespective of how little their contribution is to the business, considering the nature of those activities.
For instance, advertising campaigns are launched in every quarter of the year; business consultancy is sought on a monthly or bimonthly basis and so on. Simply put, most of the non-core activities of a business are not performed as regularly as the core activities. If specialists are hired for something that doesn’t even need to be done as frequently, then the cost of paying them outweighs the benefits yielded in return. Not only will this be an inefficient use of resources, but, keeping in mind the rising inflation, it is only expected that employees will rally for an increase in wages.
Suffice it to say. Outsourcing is the smartest and one of the fastest growing solutions for running a business. It will keep your costs low, center your focus towards activities that demand your attention and efforts and also get you efficiency in work - all in one package!