Should I Outsource or Hire Part-time
IS OUTSOURCING A SOLUTION FOR YOU?
During growth phases it often becomes questionable whether to hire a part-time, a full-time, or a contractor to cover certain aspects of business. I often get this question when clients begin annual budget planning and specifically for the tasks of bookkeeping. So, in what situations does it make sense to consider outsourcing and when should you go through extra efforts to hire in-house?
As someone out to help others work more effectively, the article touches upon both organizational solutions and those that could help at home. After all, there is only so much time in the day and if you have burn out at work or at home it likely affects the other as well.
Reasons to Outsource
Sometimes the decision has to be carefully weighed to include a combination of a few pros and cons. Here are some situations in which outsourcing is a good idea.
It isn’t a good use of your expertise. If you were to assign your work to hourly rate, half day or full day rate, what would that look like? Does it make sense to pay someone else to do that so you can earn that wage with your expertise? Consider your contribution to the community.
You could pay someone to do it for less than your time is worth. If you were an attorney and get paid $350 an hour would it be worth your while to pay for two cleaning people to clean your house for 2 hours at $120? Most likely.
You hate to do the task. If it is painful or you perpetually avoid the task, then consider the time savings just in your procrastination of the task. I hired a VA to upload content and pull-out pieces for social media because though I value the importance of that task, I just wasn’t doing it. It has been well worth it to know that someone is keeping me on target and doing that part that is so troublesome to me.
You don’t need many hours. If you can pay a highly skilled worker to do something in 10 hours per week that would take a non-skilled person twice as long then it may not be worth it for you to spend the extra money. The quality of the work and the oversight from the manager could be well worth it. For this type of laborer, it may also be less to pay the top rate than to hire someone in house. The cost of onboarding, payroll expenses, benefits, etc. add up quickly. You may need a new flier or design for a presentation. A designer can create this for you in no time where it may take you or your assistant a whole day relearning what’s new in Canva.
It is a highly skilled task. Lawyers, CPAs, Payroll Processing, etc. You aren’t going to pass the BAR exam to write up solid contracts and deal with legal policies. These are easy decisions. Bookkeeping is one of those areas that could go both ways and one of the questions I get asked about outsourcing most often. Should you understand how to review the work of your bookkeeper by understanding reports? Yes. Do you need to know how to enter adjusting entries for year end depreciations? Probably not. Bookkeeping can be simple for simple organizations. Those with a lot of transactions, who utilize accrual method of accounting, or are dealing with carefully tracked government grants may require the expertise of someone experienced and highly skilled.
If it is painful or you perpetually avoid the task, then consider the time savings just in your procrastination of the task.
Reasons Not to Outsource:
You need that role to grow. If your growth plans include transitioning from that simple company to the more advanced and you can see the point in your plan where you need this person part-time, then by all means, get it going now. Hiring is not easy. But making a contractor relationship work also takes a great deal of communication. Why not invest in your own growth to groom someone for the role.
You don’t want to understand it. You must understand financials. You don’t need to know how QuickBooks works but you must know how to read the reports that are given to you (P&L, Bal Sheet, Statement of Cash). Don’t hire someone so you can stay ignorant of important things. In fact, I would argue that anyone you hire or outsource to you have to be comfortable enough to question and ask for explanations. The alternative is finding out that the reports you review are inaccurate, incomplete, or money has been embezzled because you put too much faith or responsibility into someone else rather than practicing oversight. The biggest complaint bookkeepers have are about their clients who don’t respond and then need something immediately. I find they also stop going above and beyond if their clients are checked out and unengaged. After all, why should someone else care about your business if you don’t?
You have a lot of little tasks that you need help with. Training checklists, SOPs, and other forms of assumptions are great ways to train for all positions, even those temporary ones like interns. Continually recruit and train interns. For higher skilled or positions requiring access to secure data, invest the time and energy to recruit and train an entry level employee who will grow with your organization. The more money you have to spend, or the higher your own time is worth, the more skilled and bigger investment this employee will be. They must have some basic qualities, but you must create the environment where they can learn. Either way, this is an investment and will require work from you and/or your managers. Many companies start with people wearing multiple hats. What are the least desirable, least skilled tasks for you? Determine this for all your staff and between 5-10 people you will have enough to hire an entry level person or intern.
You are looking to save money.
In this situation the cost isn’t always in dollars. You can afford to pay someone highly skilled at a higher rate because you have less oversight required than someone who is less or inexperienced. Time is money. And it will cost you either way.
When to Make the Switch
Sometimes it may make sense to outsource when you first require that kind of work. As you require more and more of their time, you will realize that hiring someone in-house will be more cost effective. There isn’t really an easy answer here but it essentially comes down to budget. Run the numbers and determine hard costs like salary, benefits, employer expenses, along with the less tangible things like hiring, onboarding, and training.
Look at your goals. How is your revenue expected to increase and will it make the most sense to have that person on the ground running? I won’t lie. There may be a growing pain in this area which is why taking that time to evaluate and run the numbers is important.
How to Make Outsourcing Work
Create clear handoffs. Know your role and theirs. Make sure they know what you are expecting of them and vice versa. Determine who will supervise or be their point person. Understand and be clear on what you really need. Set this in writing with either a contract or scope of work.
Provide relevant information. Has the work already been done to determine your branding? Have you created a draft or already done something you need someone else to make better? It is best to gather and distribute this information BEFORE the work begins.
Request referrals from other owners or managers. It’s important to run in circles with people who have similar challenges and do similar things to you. Being able to get a recommendation for a trusted role takes away a lot of the headache. Get more than a few and once you start interviewing ask them for other client recommendations. Exercise care with recommendations. Listen to what is not being said in addition to what is being said.
Feel comfortable asking questions. You must feel like you have a good relationship with this person. I’ve seen plenty of situations in which advisors are seen as aliens who speak a different language. You must be able to ask questions, understand, and get behind the job that they do for you. I’m am especially talking about accounting! Don’t be afraid to ask questions or for something to be explained again.
Listen to your gut. Find someone you trust and are comfortable with and listen for the red flags. You hire them because of their skills and ability to achieve results. Foster an environment wear you and they feel comfortable. This may mean comfort at disagreeing or asking hard questions.
Choose for value instead of price. The most expensive may not be the best. And the cheapest may not be the worst. Consider the factors above, what you need along with your budget needs to determine the right person for your organization. Interview and talk to a few different options.
Check-in regularly. Make sure things are on track and questions are being answered. How can you support them to work better by removing barriers or providing information? Provide feedback and ask for it.
And lastly, reevaluate your own needs regularly. What worked for you or you needed at one point may change quickly. Or you may gain information you didn’t have that helps you decide hiring in house really would make more sense.
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