As a small to midsize business grows, the demands on its time, talent and resources naturally increase. Many owners reach a stage where handling every function in-house — or personally — can hinder growth or create unnecessary risk for the company.
If this sounds familiar, or if you are approaching this point, it may be an appropriate time to consider whether outsourcing could be a strategic next step.
Common candidates
Many business activities can be outsourced. The key is identifying functions that, if handled by an external provider, would improve efficiency, strengthen compliance, and give you and your team more time to focus on revenue-generating work. Here are some common candidates:
Accounting and financial reporting. Our team at Rudler can manage your books, collect payments, pay invoices and keep accounting technology up to date. We can also prepare financial statements that meet the standards expected by lenders, investors and other outside parties.
Customer service. This may seem an unlikely candidate because you might believe that someone must work for your business to truly represent it. But that is not necessarily true. Internal customer service departments often have high turnover rates, which drives up costs and reduces service quality. Outsourcing to a provider with a more stable, well-trained team can improve both customer satisfaction and operational consistency.
Information technology (IT). Bringing in an outside firm or consultant to manage your IT needs can provide significant benefits. For starters, you will be able to better focus on your mission without the constant distraction of changing technology. Also, a provider will stay current on the best hardware and software for your business, as well as help you securely access, store and protect your data.
Payroll and human resources (HR). These functions are governed by complex regulations that change frequently — as does the necessary software. A qualified vendor can help your business comply with current legal requirements while giving you and your employees a better, more secure platform for accessing payroll and HR information.
Downsides to watch out for
Naturally, outsourcing comes with potential downsides. You will need to spend time and resources researching and vetting providers. Then each engagement will involve substantial ongoing expenses.
You will also have to place considerable trust in providers — especially in today’s environment, where data breaches are common and cybersecurity is critical. Finally, even a solid outsourcing arrangement requires ongoing communication and management to maintain a productive relationship.
A Tailored Approach to Outsourcing
Every business owner should carefully evaluate the appropriate timing for outsourcing, which services provide sufficient value to justify the cost, and how to measure return on investment over time. If you would like assistance assessing your options or gaining a clearer understanding of the financial and tax implications of outsourcing, please contact your Rudler, PSC advisor.
RUDLER, PSC CPAs and Business Advisors
This week's Rudler Review is presented by Brandon Hughes, Staff Accountant and Evan Kandra, CPA.
If you would like to discuss your particular situation, contact Brandon or Evan at 859-331-1717.
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