Like large businesses, small and medium businesses (SMBs) and SMEs can thrive by strategically outsourcing key tasks. This guide focuses on the 5 things SMB’s and SME’s should outsource to reduce costs, enhance efficiency, and find reliable partners for growth. By leveraging these outsourcing strategies, your business can successfully manage support functions and focus on its core objectives.
1. Payroll
Payroll is one of the most outsourced operations in the business world for a long time. Many large corporations’ titans such as Paychex, Inc. and Automatic Data Processing, Inc. (ADP) can be held responsible for cutting checks for businesses large and small for years.
However, as SMBs have increasingly plucked out market share from the big corporations, large payroll firms have had to advance their service to meet the needs of these smaller clients.
Simultaneously, technological progress has led to feasible payroll software solutions, and vendors have to meet the needs of SMBs who feel underserved by the payroll beasts.
As a result, today’s SMBs have a wide range of payroll options. First, we have in-house administrators who usually employ payroll software to do the work. Second, we can find large, traditional payroll services—and a bunch of smaller competitors striving for their piece of the outsourcing pie.
Payroll is one of the largest expenses that SMBs have. It can also be the company’s enormous headache if it isn’t done correctly.
Whenever is your payroll done by a member of your team or a service provider, he or she must understand the relevant tax laws and regulations alter remarkably from state to state. It can be an administrative disaster, and that kind of mistake could mean a phone call or visit from the IRS.
2. Accounting
When we are talking about outsourcing, finance, and accounting (F&A) are some of the first processes that are under consideration.
As the market develops, SMBs are constantly seeking fresh ideas and hoping to find new answers to streamline F&A processes. They are spreading outsourcing to new areas F&A, and new industries.
Today, a vast number of SMBs are outsourcing the all-important in-house inspecting function. These shifts are outgrowths of their desire to overstep from elementary transactional processes, accounts payable (for example) to even greater and centralized functions such as prognosis, budgets, and internal audits.
There are two pointers, that indicate that your SMB is competent and capable of handling F&A processes:
- the capability to simplify
- the ability to standardize
These crucial implementations provide profit that is multifarious. There is an inflow of money, services, and information. With the reduction of F&A processes, SMBs have realized that they are well placed to bring down the cycle necessary to close books.
Even more, they are in a favorable position to evolve upgraded benchmarks and standard financial processes that enable them to meet the necessary regulatory requirements.
As mentioned, amplifying the boundaries of outsourcing can boost benefits. For example, F&A industry experts say that if an SMB outsources either accounts payable or receivables, its benefits are making the most of the money at its disposal, and there with advancing the company’s internal processes.
Enterprises across the world are looking for new and improved ways of leveraging data, so as to harvest the benefits from them. In keeping with this goal, SMBs are employing outsourcers who have exceptional skills, combined with technological resources.
Transformative technology and tools that would help improve SMB business performance, reporting, insights, process efficiency, and limpidity are essential for SMBs.
New generation F&A outsourcing supplies the company with the capability to access add-on tools, which will improve existing technology and take advantage of new technologies such as mobile, cloud, and robotics automation.
With these tools, SMBs. are in a position to achieve much better insights and upgrade productivity, and all of that while working within the parameters of their existing systems.
3. IT Infrastructure Management
The most common reason why SMBs outsource their information technology needs is that they experience fewer problems. Of course, this is an oversimplified and extracted incapacitation of a complex issue.
If you want to make a proficient business decision regarding whether or not to outsource your SMB’s IT, you need to back it up with supporting information.
An IT department is made up of a composite environment of hardware, software, and computer networks, which allow you to perform crucial business functions and workflows such as customer relationship management (CRM), accounting and financial processes (ERP), email, and document creation.
Your SMB’s success depends on it being able to use these actions reliably and efficiently. For example, companies must receive and send emails to communicate with partners and vendors, employees, and clients, in order to fulfill product and service orders.
How long can your company operate without such an essential function? Additionally, you need to be able to access financial data and customer information to run your business.
So, if you want to protect these processes, you need to perform many back-end functions, including server monitoring, data backup & recovery, security, and antivirus protection.
With this large and fundamental undertaking, is it achievable for an SMB to take on the tasks and responsibilities mandatory to run its IT department?
All of the mentioned could not be done without an enormous commitment and investment in IT infrastructure, talent, money, and time. Training IT employees, maintaining IT devices, and keeping technology cutting-edge are huge responsibilities for most SMBs.
4. Procurement Of Goods and Services
Procurement outsourcing for SMBs is created to help small business owners take advantage of many of the strategic assets larger corporations have been using for years.
In fact, a large percentage of all big companies plan to increase their usage of outsourcing. Entrepreneur.com recently said, “Entrepreneurs have long seen outsourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small businesses.”
Times certainly are changing.
Most of the SMBs have very limited procurement support, which is usually a mutual resource to other departments as well.
Procurement leaders already know that they can expect a large talent gap in the near future due to baby boomers retiring and small companies will be the most because they have limited resources to attract talent.
Procurement outsourcing can solve this problem by allowing access to industry experts on demand.
Adding additional inventory for SMBs represents a major risk because of the fluctuations in business. More employees often mean more risk. Having procurement outsourcing can help with cutting down the risk since you get the gain of the service without the further overhead expense.
Any small company can use increased purchasing power, but how can they create negotiation leverage on their own with limited purchase volume? This is an enormous benefit to using procurement outsourcing.
There is strategic collaboration in place to provide prompt savings across many goods and services, which most small companies are already using.
In addition, procurement outsourcing allows SMBs to tap into competitive assets that most of their competitors are not using. Many good and creative solutions can come from association with the supplier network, which is exactly the place where procurement outsourcing lives.
Therefore, new product development, exclusive distribution, packaging, inventory solutions, and financing are all fields that can help to separate small companies from the competition.
Using the best methods often can help with driving cost savings. The cost savings can also come thanks to current solution providers without the additional overheads.
Needs and technology change over time and services from providers are continuously changing but most contracts stay in place costing SMBs huge amounts of money simply because they don’t localize these changes. In most cases, procurement outsourcing even pays for itself through cost-saving divisions creating no risk for the small company’s owner.
There has never been a better time for SMBs to take advantage of procurement outsourcing in order to develop the best solutions, which can help separate them from the competition and increase their cash flow.
These principles apply to practically every industry. Procurement outsourcing allows small company owners to get an approach to many benefits that larger companies use without any risk.
5. Lead Generation For Business
The sales leads are the lifeblood of new business development for SMBs. All companies require a reliable and consistent stream of business leads.
The most common options are outsourcing the lead development process to lead generation companies, requiring the sales team to create and qualify their business leads, or developing a lead generation department within the company.
The two internal options can create problems because lead generation lies outside of the core aptitude of most companies.
That is the reason why outsourcing your lead generation to lead generation companies can make the most sense for your team.
There are two main types of lead generation companies:
- Major account lead generation companies
- Small-scale lead generation companies
Major account lead generation companies usually look for clients that sell “complex” B2B products or services. That targeted crowd used to generate business leads incorporates the high-level “decision makers” C-level contacts and VPs – upper management of the company.
The sales chain on these business leads is mostly long and requires various sales calls over a certain number of weeks and months. The style of selling is professional, oriented to solutions, and generally focused on return on investment (ROI) and the possible value to the customer’s business.
This target market usually buys items with a higher price, than the accounts served by the small sale lead generation companies, and the amount of these major account B2B sales leads is important.
Small-scale lead generation businesses target smaller purchases, mostly under $10,000. The target audience is still B2B but their sales chain is much shorter. In fact, since the dollar figure is lower there can be little or no sales chain at all because this type of “commodity” purchase cries out for an easier “yes” or “no” approach to making decisions.
Often the level of contact can make the buying decision because the product or service is not affecting various departments.
Before choosing a lead generation company, you need to do some research and even interview a few different lead generation companies to see which solution is the best fit for your needs.
Figure out which company is most similar to your target market, overall sales style, and company’s culture. Every lead generation business needs to serve as a logical extension of your company considering the competence, customer service savvy, and professionalism, that you would expect from your own internal sales force.
Conclusion
SMEs are already the foundation of most domestic economies. With the right tools and support, they could well become the foundation of sustainable economic growth too.
The basic characteristics of small and medium enterprises and entrepreneurs, are primarily their size, flexibility, propensity to innovative and risky ventures, and greater opportunity for specialization, enabling these companies to be much easier than big businesses the system adjusts to continuous changes in consumer demand and business conditions in the global market.
In this way, small and medium encourage enterprises to strengthen competition which results in improving the quality of products and services and lower prices, the development of innovation and new technologies, and economic growth of the national economy in general.
