Benefits of outsourcing for home based businesses
Far too many times I hear people saying outsourcing is for large businesses only. Since most of the businesses in the United States start and operate from home, according to research, we should look into the Benefits of outsourcing for home based businesses. Can small businesses afford to outsource and does it even make sense? In this article I would like to look at the possibilities outsourcing brings and how can it affect the profitability of your business. I will give real life examples and also draw from my own experience. I think my conclusion will make sense, but if it doesn’t, let me know and we can discuss.
What is Outsourcing, Anyway?
For those who do not understand the term “outsourcing,” it simply means hiring an outside company to do some functions for your company. Investopedia’s definition of outsourcing is as follows:
Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.
As investopedia points out, it is meant to reduce cost for an organization while reducing their work load. They also say that it is a smart move for some companies to implement outsourcing strategy only if used properly. It is easy to get into disastrous contracts and loose lots of capital for large organizations if managers do not do their due diligence. But for smaller businesses, there is not as much risk as for large ones. So, you must be asking yourself, what function of my business can I outsource? Let’s get into that right now.
Home Based Businesses Should Outsource
Let’s take my small business where we sell small items, such as cellphone accessories online. This business started back in 2010 and daily volume of orders is now at 250-300 orders. That’s a lot of work to do if you know what I mean. The work is not just packing and shipping, but there is much more to it. Since the items are small in size and the weight is not that heavy, we use post office (USPS). If you have ever used USPS you will understand why I am mentioning it. It creates lost of issues with mis-deliveries and lost packages, but let’s take everything step by step. I will describe the process needed to keep up this business and you think about which part can be outsourced.
Placing orders and keeping Inventory
Placing orders can be done through order management softwares, but I like to do it manually. I like to know what I am ordering and how many. Sometimes I will sell an item that may never sell again, so by settings, software may order more than needed of that product. As I already mentioned, I do not like to outsource this part of my business, so the answer is clear.
Printing Shipping Labels
It is a simple process that requires you to upload all the orders with shipping details to a software called Stamps.com. Once uploaded, each order should be checked for weight in order not to overpay or underpay USPS. Orders that are ready to be shipped should have their tracking numbers posted once the label is printed. Fairly simple, but lots of time considering the amount of orders we get. So, I do outsource it. I hired someone from overseas through upwork.com and gave them access to one of my computers through Teamveiwer. Temviewer is a software that allows someone else to get into your computer and use it. So the person does all the posting, uploading, and printing. We just collect the labels and label packages for shipping. Easy, cost effective, and smart.
Taking Packages To USPS
Taking all the packages to drop off at one of the local USPS locations. Not a bid deal, but again time consuming and lots of packages. Physical work is not my favorite one. So, we schedule pick ups for USPS through their website. Mailman comes in everyday and picks up those packages ready to go. Is that outsourcing? I would so and it is free!
Customer Support Through Phone, eMail, and Live Chat
We provide all three support systems for our customers in case they have any trouble with their order. We also use the support system for pre-sale calls and questions. Increases conversion rate and brings in more cash flow into the business. So, while packing all the orders, it would not be fun to take all the calls. My next move was again to go to upwork.com and get a virtual assistant who would perform all those three functions while I am busy taking care of packages. Again, outsourcing, cheap and effective. Customers are happy and we are happy.
Web, Banner, and Product Image Designs
I am familiar with photoshop and know how to use it, but i am too slow. It takes me hours to create a nice banner. Besides, I feel like I am wasting my time every time I try to create something like that. We create banners for new products, events, holidays, and so on. So we need them made quite often and we do not like using the same old one over and over again. So, I go straight to Fiverr.com and get 1 banner done for $5. As a result I don’t have to spend hours and my banner will be made professionally.
I do outsource as much functions as I can as they arise. When you try to grow your business, you will face additional challenges that most of the time will only require your time. But isn’t time is most valued currency in this world? As you can see from my example, I don’t just blindly outsource functions and positions. I do it only when it makes sense. I would argue that some functions should never be outsourced by the small business owners. Because Benefits of outsourcing for home based businesses is also limited to an extent. Keeping inventory is one such function and responsibility that should only be done by the owner. Because you know your business best and keeping a good balance at hand is of outmost importance.
I have already made my conclusion and have been implementing it long before this post. Now it is your turn to think about which functions can you outsource? I am positive you will be able to find at least 30% of activities that you can hire someone from overseas and let them do it for you. There are challenges of course. You will need to fin the right people for the right price. You have to think of the pay off and see if it makes sense for you. I am positive that at least some things can be done by others.
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