By Jennifer Barnes
The term “outsourcing” is being widely used these days. Many still think it means something that happens overseas, but outsourcing, or the use of fractional services, is something businesses can now find in their own back yard.
There are literally hundreds of companies in the San Diego community that offer outsourced services, from information technology to marketing, accounting, finance and human resources. Outsourced or fractional services are a growing business because they help support other growing businesses. Companies that have been early adopters of fractional services have found economies of scale, greater efficiencies and are increasing their bottom line.
Twenty years ago, outsourcing was a relatively new concept. In the space of a generation, outsourced business services have become essential for thousands of small- and medium-sized businesses throughout the United States. In a recent San Diego Business Journal listing for the fastest growing private companies, there were seven outsourced businesses in the top 10, including my own company, Pro Back Office, which ranked as the fifth fastest growing business in 2016.
Most entrepreneurs think they can manage and perform all aspects of their business. As a direct result of this assumption, the growth of their business does not reach maximum potential or efficiency and its expansion is stalled. However, by using an outsourced or fractional approach in select areas of the business, CEOs and business owners are able to channel their energy and resources into developing their business and generating more revenue. When you don’t need 40 hours of work at one level, you should highly consider outsourcing.
There are all sorts of outsourced services. People Driven Solutions International, a local technology partner that helps companies understand how technology today fits in various businesses and who the right vendors are to implement solutions, is just one great example of a fractional technology service. Scott Krawitz, CEO, had this to say about outsourcing technology leadership, “Technology, like medicine, is moving to more specialists then generalists. This makes it hard for companies to know who to use, what technologies they should be looking at, and how to find both. They also may just need a specialist for a project verses ongoing support. The ‘gig economy’ has really allowed for the growing move to just-in-time engagement with technology specialists.”
Today’s technology has transformed the outsourcing game, making it increasingly accessible for small and mid-size businesses. Technology now gives qualified outsourced professionals the ability to work from virtually anywhere. An area that Pro Back Office has decided to outsource is marketing. We work with RebL Marketing, a firm that provides outsourced marketing teams. Scaling our marketing efforts through RebL Marketing was budget friendly and gave us the ability to be smart with our marketing efforts.
Reb Risty and her team manage our website, blogging, articles, newsletters, social media and public relations. We have weekly meetings where they are onsite and engaged as part of our team. According to Risty, “We’ve found there is a growing need for emerging companies to outsource the whole marketing department. The real bonus of working with our outsourced marketing team, is you get years of experience and cross pollination of ideas through the team’s work with other clients.”
An area that we at Pro Back Office are passionate about is outsourcing your accounting. We feel strongly that a CFO should not be doing data entry and that a good majority (if not all) bookkeepers are not capable of high level analytics and providing important key performance indicators. It’s unlikely that having one person doing everything is a good idea, so if you can get a team of people putting in 20-40 hours a week at your business, for the same price as hiring one in-house person, you’ll find that if everyone is doing the role they are best suited for, you will have more operational efficiencies, less room for error or fraud, and better checks and balances. Putting people in positions where they are going to be the most effective for your business will help you save money in the long run and will allow you to focus on what drives your business forward.
When determining which areas require the most immediate help, be honest. Ask tough questions. An up-front assessment should examine things that directly impact your profit margin. Ask yourself this question: “Is my business getting maximum return on investment from my internal processes and with my external business interactions?” If you answered “no”, then your business can benefit from outsourcing.
The first step for entrepreneurs is to figure out how to build their business with help from outside professionals. It’s time to take a hard look in the mirror and decide which processes could use some much-needed streamlining. Using the right technology helps reduce mistakes and can prevent monetary loss. Because of this, you will want to find people on your team who have strong technology skills. Are you doing everything you can to ensure that your business is running at its fullest potential? Outsourcing can result in:
- Greater efficiency — Outsourcing companies face a lot of internal and external pressure to develop strategies and technologies that center around satisfying the client. Outsourcing companies can’t afford to have low standards of work, and that often leads to a much higher level of efficiency and output.
- Experienced workforce — Outsourced finance and accounting options offer a talented pool of experienced professionals, which is especially beneficial for startups who may not have the current bandwidth to hire and train the appropriate accounting or finance resources.
- Timely turnaround — If you’re worried about meeting deadlines, outsourcing is the way to go. Outsourced accounting and finance services are designed to have all the required levels of resources and experts to streamline projects for a timely turnaround of financials.
Making the switch to outsourcing — even in small, measured steps — can be a challenging decision for many firms, startups, and sole proprietors. But it’s important to be proactive and think long-term. Give your business a much-needed honest assessment of its current capabilities and then move forward.
Jennifer Barnes is co-founder of Pro Back Office, a San Diego-based provider of outsourced accounting and strategic consulting.
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