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A lot of startup companies are sprouting left and right, but most of them do not survive. Some built a product people didn't want, some may have an uncertain business objective, while others may have jumped the gun too soon. But, one of the top reasons that small businesses fail is poor management stemming from lack of expertise in the different areas important to running a business.
In a typical startup setup, pioneer team members try to do everything at the same time due to limited budget and resources. However, even the most promising startups or SMEs can't do everything on their own, and it's often a recipe for disaster when they try.
Startups fail to expand or even survive in a highly competitive business environment because of lack of funding, expertise, and other resource constraints. Business outsourcing can help them do more with the limited resources they have and focus on improving their business by outsourcing non-core activities.
Why Startups Should Outsource
Most startups are composed of a small team with only key employees, and for some, just the proprietors and founders. Because they're just starting out and are being cautious about costs and expenses, they avoid hiring new people and try to do everything by themselves. As a result, the workload becomes unmanageable. With this, lead times are prolonged, and quality of work starts to suffer. The probability of errors is high because they're trying to complete business functions that are outside their expertise.
When processes start to become strained, or deliverables start getting delayed, you know it's time to outsource. Otherwise, the quality of your products and services will continue to decline. As a result, you may lose clients and customers. Worse, it will contribute to the destruction of your brand reputation.
Additionally, startups have a limited amount of cash at their disposal. Avoiding big capital expenses and lowering operational costs can help them stretch their startup capital and give the business more time to establish a footprint and grow.
Common Costs When Starting a Business
A substantial amount of money is needed to fund your initial business operations. Whether you're selling physical goods, technology, or even downloadable software, your startup needs to allot money for office space, employees, and IT infrastructure.
You also have to consider the hardware and technology needed to create your product and keep the daily business operations running smoothly. You also need to spend on overhead and administrative costs, as well as professional fees and employee benefits.
If you plan to do everything in-house, you also need to allot budget for your hiring and recruitment costs, as well as the time it takes to fill an empty seat.
Benefits of Outsourcing for Startups
Startup companies and SMEs who invest in business outsourcing can reap advantages that help their businesses expand. Most businesses are now warming up to the idea of outsourcing administrative and creative processes. In fact, a Deloitte survey revealed that 66% of companies outsource certain business processes to other companies.
When you try to ask employees to perform tasks outside their skill set, you will inevitably compromise quality. On the other hand, you'll get field experts and professionals for a specific task when you outsource.
Ultimately, outsourcing business processes will save you from a lot of costs and will let the key members of your team focus on growing the business, as opposed to feverishly jumping from one role to another.
Areas to Outsource
Business functions and operations can differ, but most companies have similar processes that easily be outsourced.
1. Human Resources No startup will ever flourish if they're not prepared for growth. As mentioned, poor management is often among the primary causes of a startup’s failure. Recruiting top talent and hiring the perfect candidate is no easy feat. Often, it takes months to fill an empty position, and this means that businesses are not reaping the profits while the seat is left open.
When startups attempt to delegate HR and administrative tasks to their key employees, there are a lot of clerical work and processes essential for business operations that are overlooked. However, when you outsource the HR function of your business, not only are you ensuring that your startup company can recruit and hire top candidates, but that compensation and benefits packages are tailored to improve employee engagement and employee retention.
2. Data Entry and Processing Data entry outsourcing is one of the most common business processes that can easily be outsourced. It can take up a lot of time whether it's manually or automated. You need specially-trained data entry professionals to efficiently sift through, sort, and analyze the data.
It's the era of big data. With the vast amount of information available, it's crucial for a business to leverage the data available and find out what's working and what's not for their business, what consumers want, where to reach your target market, and how to encourage them to become loyal to your brand.
3. Bookkeeping Services Most startups and small businesses don’t need a full-time, in-house accounting and bookkeeping team to address their finance and accounting needs. Outsource your bookkeeping services to a third-party firm, and it will save you a lot of money.
In the Philippines, for example, there’s large talent pool of certified accountants whom you can hire to keep your books in order, from payroll to taxes. Apart from their advanced English language skills, they are also proficient in international accounting standards.
4. Digital Marketing Building a brand doesn't happen overnight. Marketing your brand on your website, social media accounts, and other digital channels can save you a lot of marketing dollars. Some startups, however, don't realize that it's not as easy as they may think. Time, resources, and expertise are necessary for any digital marketing campaign to be a success.
Digital marketing involves a lot of serious content creation to establishing the brand online. These marketing strategies include web design and development, content marketing, SEO, online PR, social media marketing, paid advertising, and more.
Outsourcing your digital marketing services will save your startup company a lot of time and money, as creative agencies are experts in this field, and will deliver the results you may otherwise find difficult to achieve on your own.
5. Customer Service These days, customer service is not just limited to voice calls. It can now be provided through email, social media, messenger apps, and other digital channels. In fact, customers expect brands to be reachable through multiple platforms, making it increasingly hard for companies to deliver streamlined customer service. Fortunately, there are outsourcing companies that can help you provide omnichannel customer service and efficiently integrate multiple platforms to make sure that your brand provides top-notch customer experience.
Things to Remember
Before you start looking around for outsourcing companies, make sure you know exactly what business process or function you want to outsource. Outline the processes in your company to determine what the most important ones are, and the tasks that need to be completed by your small team specifically.
Once you've decided to outsource, make sure to choose an outsourcing company that can help your business grow instead of those that offer offshoring and outsourcing services that make it hard for you to take over eventually.
Once you’ve decided to outsource, make sure to choose an outsourcing company that can help your business grow instead of those that offer offshoring and outsourcing services that make it hard for you to take over eventually. Choose wisely and remember, this isn't a set and forget strategy.
To ensure, your outsourcing journey is a successful one, read our tips on the things you can do to achieve the most out of your offshore team.
We're Specialists in setting up teams in the Philippines. Over more than a decade we have helped businesses save over $252 million in Labor and Occupancy costs and employed more than 4,200 staff in the Philippines.