The pros and cons of outsourcing different business functions

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Do you own your own business? It can be challenging work because you're responsible for the success of the enterprise, paying your staff's wages and, ultimately, the company's profit. When it goes well, the rewards can be vast. If you achieve profitability and can scale up efficiently and effectively, you can end up totally in the money. But on the other hand, if things go poorly, you end up holding the buck.

We mentioned scaling up, and when a business scales up, it often needs to recruit different staff roles or even whole teams to manage various aspects of running the business. From payroll to pay your staff, to finance to pay your creditors, to HR to manage people and marketing for digital advertising and link building in Australia - it can take various teams to keep things running smoothly.

This leads to the question of: is outsourcing a viable option for your business? This helpful article is going to discuss the pros and cons of outsourcing, so continue reading to learn more.

Outsourcing is a term used for when you outsource various business functions to a third-party trader or company to manage this aspect of the enterprise for you. A common task to outsource is taxation and all types of accounting, including bookkeeping. There are some decent arguments both for and against taking this route of managing aspects of a business, which we'll now discuss.

Paying your staff is a time-consuming and, at times, confusing task for business owners. You need to pay your staff accurately, factoring in their total hours worked, the relevant industrial instrument such as the modern award or the contract they're employed under, as well as paying towards superannuation and Pay as You Go tax instalments.

It's very easy to make simple or gross mistakes paying your teams, and nothing will upset your people, like not being paid their correct entitlements or wages on time. Mistakes can be a severe headache to fix and could even cost you otherwise loyal staff who might jump ship if their pay gets stuffed up.

A pro for outsourcing your payroll system is that you can relax, knowing that this task is in the care of a dedicated company that will manage all the intricacies above for you. Then, you can spend the free time created by this on focusing on what matters - strategy, chasing leads, generating revenue for the business, and ensuring cash flow and success.

A drawback to this is that mistakes can still happen, and if they do, you're the one who has to rectify them by following up with the third-party company. If they have many clients and are busy, this may mean delays in fixing an issue. If payroll was done in-house, you could rectify an issue much quicker if you've got dedicated staff working on this business function.

Another task that takes precious time and resources away from a business is the relatively dry work of accounting and bookkeeping tasks. Even with bespoke software solutions for this type of work, it can take time and considerable exertion to keep track of a business's income, expenditure and all the red tape that comes with it. And that's not even to mention come tax return time - filing your annual tax return can be a nightmare for a business owner.

For these reasons, it is worth considering outsourcing these accounting tasks to a dedicated accounting company. Many of these can offer both accounting and bookkeeping services, where they manage the entire process for you. Sure, it might cost you some money for this, but the spare time that you've created can then be spent on innovative ways of diversifying your income streams and getting more clients or customers.

A con to outsourcing accounting, similar to what we mentioned above, is that errors can be a major hassle and can even be disastrous for a business, such as a large tax bill. A benefit to keeping accounting and bookkeeping in-house is that the dedicated person or team will know the business intimately and can provide tailored advice and service beyond what a third-party firm can offer.

Another time-consuming but essential task in this hypermodern era is digital marketing, paid online advertising, and Search Engine Optimisation (SEO). Digital marketing techniques ensure that your business offerings are displayed to people who could be converted into potential customers or clients. This includes activities such as search engine advertising, link building, social media advertising, and other diverse forms of online marketing.

A solid SEO strategy and implementation ensure that your business's website will rank high organically or naturally in search engines without having to pay for ad spots at the top of the results. However, pay-per-click (PPC) digital advertising is also a worthy investment for business owners, as people do click on ads for products or services they're interested in.

SEO and PPC are a science, and it takes skill and expert knowledge to do it right.

It could be worth the money to outsource these tasks to an agency that specialises in them. The agency can use its dedicated teams and experience to generate interest in your company.

It is an investment, but the increased amount of leads and increased organic web traffic will often pay for the cost of the agency's fees a few times over.

In most cases, outsourcing will be the best option for a business. However, in some cases, when it is in line with a growth and scaling strategy, it can be viable to employ in-house marketers. This is because they can do everything for one salary, whereas an agency will charge for each digital marketing task they perform for you. It's worth comparing the cost projections for employing a staff member or team versus an agency's quotation for a year of digital marketing suite services.

Finally, the last business function you may outsource is Human Resources or HR. This has everything to do with employing people - hiring, firing and everything in between. An HR company can manage employment contracts, onboarding, mediation, performance management and terminations. This can save you time and money, and you can redirect those funds back into the business. However, HR firms are expensive and sometimes don't know the industry as well as you do. An in-house HR staff member or team can get to know your operations well and provide tailored advice and guidance based on this.

In this informative and illuminating article, we've shared the key benefits of outsourcing business functions such as payroll, accounting, bookkeeping, digital marketing and HR functions. We've also shared some of the drawbacks of outsourcing these tasks. By now, you're in an excellent position to make strategic business decisions about outsourcing.