Running a business on your own can be daunting but it can also be the most rewarding thing you can do. To save money and maintain absolute control, most entrepreneurs try to run things on their own as much as they can.
On the surface, it seems like the smart thing to do especially if this is your first business or if you have a small business. But is it really worth it, long term? What pros and cons are there to running your business alone?
Almost All Business Are Small Businesses
According to the Small Business and Entrepreneurship Council (SBE Council), there were 5.68 million recorded employer firms in 2011. Of that number, 99.7 percent consisted of firms with less than 500 workers and 89.8 percent had less than 20. In 2012, there were 22.7 million non-employer firms. This changes the percentage of firms with less than 500 and less than 20 employees to 99.9 percent and 98 percent, respectively.
In the SBE Council’s 2007 Survey of Business Owners, which was released in 2011, a few notable things were found in regards to the functions of small businesses. It was found out that 51.6 percent of business operations were done at home, 23.8 percent were done outside of a home, and 62.9 percent were non-employer businesses and home-based. 28.2 percent of small businesses were owned by families. Most businesses owners were also found to have at least graduated with a college degree. And lastly, 13.6 of businesses owners weren’t American-born citizens.
Apart from small businesses, freelancers and consultants contribute a lot to the US economy. 34% of the US workforce is made up of freelancers, which makes up about 53 million people. Freelancers contribute around $700-$715 billion to the US economy. What with competition growing, it is expected that people who want to freelance may increase in the near future. The same goes with consultants working individually or in consulting firms. In 2014, they earned about $143 billion in revenue.
The Cost Of Working Solo
Solo-running business owners or entrepreneurs do all the work so it’s expected that they get all the profit. Not only that, they design their businesses around their lifestyles, personalities and interests. They make up their own work schedules, choose their own workplace and create their own paths. These people have a certain amount of freedom that enables them to become efficient and knowledgeable with experience.
But according to the US Small Business Administration (SBA), only a number of businesses survive past five or ten years. Reasons as to why this happens can vary but one of the most common reasons pointed out is that these businesses were unprepared for growth.
Business growth requires more manpower and resources, and there’s only so much work one person can do, even with automation and an efficient system. Without enough help, you will find yourself losing out on clients that you can’t take on or sacrificing the quality of your products/services to accommodate more clients.
Even if there’s a way for one person to do everything, there’s still the factor of cost-effectiveness. Every tasks costs money and when an entrepreneur has to do tasks that don’t provide maximum value, it cuts down on the bottom line. In the end, it may cost more to run the business by yourself.
Outsourcing, The First Transition To Growth
A full blown business expansion can be expensive. Hiring full-time staff, renting an office space, and paying for employee benefits can be a major investment that most small businesses can’t afford to take on.
This is why outsourcing exists. Outsourcing can serve as a transition phase that could help small and medium scale business prepare for growth.
What makes outsourcing ideal for small businesses is that it provides all the benefits of growth at less cost. With CoffeeBot for example, we provide businesses administrative, marketing, social media, content and technical support; basically all the things you need from a full-time staff without hiring an entire team or getting office resources for them.
In fact according to a survey by Deloitte, as much as 90% of business get a 25% ROI with outsourcing. And these are just conservative estimates, with the ROI seen to rise once businesses find the right outsourcing systems and right fit with outsourcing vendors.
There’s no doubt that investing in outsourcing pays. This would give you, the business owner, more time to focus on running your business and maximizing profits. And once you have enough money, time and resources at hand, you can then focus on expanding your business on site of you want or build new business to complement and support what you already have.
The Cons Of Outsourcing
One major concern solo entrepreneurs have with outsourcing is the loss of control over certain business processes. Because you are the one delegating the task to them, there are certain factors beyond your control like:
- How much information do you need to give them?
- How much creative freedom to do the job?
- How can you be sure that quality standards are maintained?
- Whether your intellectual property and trade secrets would be respected and protected
Like any investment, outsourcing comes with inherent risk. And to minimize these risks, you need to do your homework. You need to prepare your business for outsourcing. You need to allot time and resources to increase the chances for success and so the rewards of outsourcing outweigh the risks.
Preparing for Outsourcing Success
There are certain steps that every business owner needs to take in order to prepare for outsourcing. It’s fortunate that these steps actually coincide with building a foundation for growth.
To prepare your business for outsourcing you need to do the following things:
- Systematize your processes. Having a systematic approach on how you run your business will make it easier for you to visualize on what you can afford to outsource with minimal risk and what should stay in-house
- Build a system of checks and balances. This way, any task that’s delegated to an outsourcing team is still monitored and quality is ensured.
- Set security systems in place. Limit your outsourced team’s access to information and tools only to what they need. Dispense information on a need to know basis only.
- Setting contracts and guidelines for outsourcing. With more and more companies now outsourcing locally and off-shore, it’s now easier to create enforceable agreements and contracts (NDAs and NCAs) to protect your trade secrets and proprietary information from competitors and from outsourcers themselves using your information to compete against you.
- Research reliable outsourcing companies. Ask for referrals and search for outsourcing companies online that matches how you run your business.
In the end, we’re only human. There’s only so much we can do on our own. And outsourcing is the only thing that makes sense if you want growth.
The days when outsourcing was untried, untested, and unreliable is over. If you want your business to grow and last for more than 5 years, outsource smart and outsource safely.