Every business imposes a broad range of responsibilities on the owners. No matter the core activity or main profit driver, all businesses require attention to detail in the form of invoicing, accounts, scheduling, human resources, customer service and bookkeeping, among many, many other tasks.
It’s no wonder, then, that outsourcing has become so common. And with the explosion of the Internet and digital tools, outsourcing is used for more than manufacturing physical objects and subassemblies. More businesses, large and small, outsource services, financing and tasks that are traditionally thought of as belonging in-house, such as record keeping, human resources and marketing.
Some companies have even outsourced their customer relations to call centers.
This strategy frees up your resources, and especially time, to focus on your core business activities and growth. While there are considerations for keeping such tasks in-house, it’s definitely worth your time to weigh what the benefits would be to hire experts to handle specialized duties.
Advantages of outsourcing
Outsourcing the processes that are not part of your core business is a way of “letting someone else do it.” It frees up your time to focus on what you’re best at. Like Richard Branson, CEO and founder of Virgin Group, says, “If you really want to grow as an entrepreneur, you’ve got to learn to delegate.” Outsourcing is a means of delegating to allow yourself and your team to focus on what you do best.
Outsourcing also expands your possibilities. For example, instead of hiring a full-time CFO — they don’t come cheap — you can outsource those duties, even if it is just a temporary solution. In addition to saving money for a full-time compensation package that you could offer a candidate when your finances are more stable, outsourcing lets you choose from a wider pool of talent. When you choose to outsource, your network and reach automatically expand.
Possible outsourcing risks
So what are the possible risks or considerations that may lead you to decide outsourcing isn’t for your business? Outsourcing tasks and responsibilities that used to lie with an internal employee requires relinquishing a measure of control. The partner you choose should mirror your own core values. Will they be able to meet your requirements for responsiveness? What is their reputation for meeting deadlines? Are you on the same page regarding quality control? These are all things to consider.
Another risk is the possibility of the outsourced provider’s business closing unexpectedly. Such an occurance could leave your important processes, and even customers, in the lurch.
A final consideration is related to intellectual property and privacy. Could these be compromised as the result of an outsourced relationship? You’ll want to be sure those parameters are clearly established and understood prior to signing on to their service.
The outsourcing decision
Ultimately, the decision to outsource can be a turning point for a business. It can free up a company to grow. On the flip side, if something goes wrong, you could lose customers. So how do you make the decision?
Measure how much a task or process contributes to your business success. Does it give you a competitive advantage? If it’s done poorly, will that make a significant difference or lead to losses? This isn’t just a consideration for the possibility of a job being done poorly by an outsource partner. Think about this — is the task/job/duty being done poorly internally because there simply isn’t time to focus on getting it done right? If the answer is yes, then outsourcing may be the appropriate solution.
Another consideration is regarding finances. Are you looking to save money, or are you looking for a solution to reduce operating costs? Is outsourcing the answer for that? You may need to crunch some numbers to make that determination.
For insurance agents, premium financing is often a good candidate for outsourcing. It’s a specialized activity that relatively few people are experienced in or have thorough knowledge of. It can be time-consuming and challenging. As a result, the margins often do not justify the time and trouble. That’s why more and more insurance vendors look to automate this part of the business, and shift their focus to their core competencies. Outsourcing makes sense in these situations. You can’t be an expert at everything. Outsourcing allows experts to take care of it for you.
Take a look at our video, and contact us to find out more about outsourcing your premium financing.