The Pros and Cons of Outsourcing Four Business Tasks

If the Serenity Prayer had been written by a small business owner it might read: God grant me the serenity to admit there are business tasks I don’t do well, the courage to do the ones I excel at, and the wisdom to know the difference.

As a small-business owner, you need to decide what your strengths are and whether or not you can use them to perform essential tasks, like accounting, inventory management, information technology, and online marketing. Each small business is different, so I can’t tell you which of these tasks you should do yourself or outsource. Ultimately I’ll give ideas to justify both. In the end, the choice is up to you.

Accounting

Why you should do it in-house: Having an in-house accountant can be a lifesaver for small businesses because even if you run a profitable business you can still go under if you run out of working capital. Working capital is what you pay your employees, vendors, and landlord with. Your in-house accountant can coordinate your accounts receivable and accounts payable so that you have enough cash to meet your daily needs. If your company is small enough, you might be able to handle your finances yourself, using accounting software.

Why you should outsource it: If you have a strong grasp of your financial situation, you can turn to outsourced accounting solutions to handle your finances. This avoids the trouble of hiring and training a new accountant when one leaves. Accounting firms can also you monitor your finances without the expense of a full-time accountant.

Inventory Management

Why you should do it in-house: For many small businesses, inventory is their biggest expense. In-house, you can use inventory management software to avoid costly mistakes, such as product stockouts and overstocks. This software uses bar codes and scanners to empower employees to reorder, receive, and ship products while also protecting your firm by limiting employees’ access to only the data they need to do their job. It can also integrate with your accounting software to eliminate double data entry.

Why you should outsource it: If you select vendors that have good inventory management systems in place, you can work with them to outsource some of your inventory management tasks.

Information Technology

Why you should do it in-house: Information technology covers a variety of services, from phones to internet servers. If something goes wrong, it’s nice to get fast solutions from internal IT experts on the premises who are familiar with the software and the way you use it. If you use software as a service (SaaS), you are limited in your ability to customize the software to meet your needs. SaaS is also a potential security risk because your data is often stored offsite by a third party.

Why you should outsource it: Using SaaS rather than buying software can save you money by eliminating the need to upgrade to new software releases. It also cuts down on your fixed costs and gives you the flexibility to make equipment and software changes relatively quickly. External IT experts can quickly resolve issues that arise, as well.

Online Marketing

Why you should do it in-house: The internet is an inexpensive medium in which to get the word out about your business. Pay-per-click ads, search engine optimization, social media, and blogs are great ways to reach your target audience at a low cost. Online marketing is a skill you should become acquainted with no matter what you choose. Customers often turn to small businesses because of the personal touch they offer, and if you do your own online marketing, you can connect with customers on a personal level and build long-lasting relationships.

Why you should outsource it: The main issue with in-house online marketing is time. It takes time to generate blog posts, tweets, and other content that could attract customers. Entrepreneurs are often too busy with all of the other aspects of running their business to worry about online marketing. You can pay freelance writers or marketing firms to do that work for you. Companies that specialize in online data mining and internet marketing can also provide in-depth information about your customers and site visitors.

What do you think? Should you do your own accounting, inventory management, IT, and online marketing or get help from experts? It’s probably not a good idea to do everything yourself nor is it a good idea to get someone else to do everything for you. Try to find the right balance of in-house and outsourced tasks by focusing on your strengths. And may you have the wisdom to know the difference between what you can and can’t do.

About Robert Lockard

Robert Lockard is a copywriter with Fishbowl Inventory, the most-requested inventory management software for QuickBooks users. Fishbowl provides affordable inventory management solutions to small and mid-size businesses. Robert lives in Orem, UT, where he enjoys reading, writing, running and spending time with his family. He also writes for the Fishbowl Inventory Blog.
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3 comments
Robert Lockard
Robert Lockard

Thank you for your comment, Doug. I think you hit the issue right on the nose. Entrepreneurs start out so small that they have to do everything themselves, so it's hard to give up tasks as they become too much to handle. I think there are certainly good reasons for them to do their own online marketing, but I agree it can be a good time saver to outsource it. Also, I agree that companies should probably do their inventory management in-house. Thanks again for taking the time to comment on my blog post. Have a great day!

Doug Millington
Doug Millington

So many small business owners start out as sole proprietors that when they begin experiencing growth they hold onto the notion that they need to do everyting themselves. As you said, they should focus on core activites to grow their business and outsouce some of the back office tasks. Of the four areas you discuss the three areas I believe every small business owner should consider are outsourced accounting, outsourced IT and outsourced online marketing.

P.S.
P.S.

Outsourcing Goes Viral In December 2010 the Hewlett-Packard Company decided to go the way of their competitors International Business Machines Corp., Accenture PLC and Dell Inc. They will be opening call centers in India. Of course this means closing call centers in the United States and ultimately firing U.S. workers. Find out why here http://www.under5cents.com/2010/12/outsourcing-goes-viral.html