Many business owners resist outsourcing important positions, and it is easy to understand why. When you have built a company from the ground up, you are deeply invested in its success. It is hard to imagine that a contractor could match an internal team member’s commitment.
However, in my experience, today’s market is rich with high-quality, part-time talent. This includes people who typically fill strategic roles, such as CFOs, marketing directors, and technologists. And since roughly 65% of businesses fail within the first ten years, often due to poor cash flow management, some business leaders have adopted a different perspective. To help you determine whether outsourcing is right for your business, I will discuss its benefits, situations where it might not be the best choice, and tips for outsourcing effectively.
The Benefits of Outsourcing
You Get Expert Advice and Strategic Leadership at a Lower Cost
Hiring experienced professionals is expensive. Yet you need people who can bring a fresh perspective to your team and help you tackle complex projects or build and implement essential strategies. Although contractors may seem pricey, the math can prove otherwise, especially if you can’t afford, or don’t need, a full-time person in the role.
For example, I have seen full-time CFOs at small companies (roughly $10 million in revenues) getting about $200,000-$250,000 per year as a base salary. Add in bonuses, benefits, taxes, overhead, and long-term incentives (equity), and that could add up to $300,000-$400,000 per year or more. Compare this to a fractional CFO, where an ongoing relationship runs an average of $7,500 per month (roughly a quarter of the cost at the higher end of the range).
Contractors are a Unique Pool of Location Independent and Highly Motivated Talent
Looking beyond the full-time workforce, you may be pleasantly surprised by what you find. Good contractors take pride in their reputation and often invest in developing specialized skills that aren’t always easy to find in your local market.
You may need help tapping into different revenue streams, a new market, or specific marketing channels. Or you might need assistance identifying risk areas in your business or establishing essential processes and systems to improve your efficiency. Such tasks often require a high level of expertise and dedication that is easier to find if you are willing to look beyond your backyard.
Your Team Gains Flexibility to Help It Scale
Outsourcing allows you to hire for what you need when needed and scale up or down on demand. But that doesn’t mean you must do all the hiring work yourself. Professional contractors, especially those who take strategic roles, often have a referral network or even an internal team they can call upon for particular needs.
As a business leader, this is incredibly freeing. Instead of micromanaging your business and putting yourself and your valued employees at risk of burning out, you can hire experts who can see the big picture and “own” certain organizational functions. That will allow you to focus on the important work of running your company and driving results.
When Is It Better to Hire a Full-Time Employee?
Outsourcing isn’t the answer to everything, of course, and you must be discerning. Some high-visibility roles demand full-time attention and responsiveness. For instance, if you are developing a complex SaaS solution under tight deadlines for bringing it to market, you might need a dedicated resource to manage the project full-time.
It is also wise to reconsider part-time arrangements as you grow. As the volume of work ramps up, the cost benefits of working with contractors begin to break down, so you must assess the situation periodically and adjust accordingly.
Tips For Outsourcing Effectively
So, how can you build a reliable process for outsourcing? Well, it’s like hiring full-time employees, except there is less red tape. Here’s what you will need to do:
- Perform an Internal Talent Gap Analysis
Start with your company’s goals. Then, determine what resources you have for meeting those goals and what you lack.
- Develop Job Descriptions and a Budget
It is vital to clarify what you need each resource to do. When outsourcing strategic roles, you must rely on the expert to provide guidance, which can be tricky. Still, you should be able to share your goals for the role and provide insight into the internal resources you can provide so that they can give you an informed cost estimate.
- Vet Prospective Contractors Carefully
As you would an employee, screen each candidate for fit across various measures: culture, skills, experience, creativity, passion, etc.
- Treat Contractors Like Part of the Family
Once you hire someone, make them feel welcome. Expect onboarding time, help them connect with your team, and then commit to regular check-ins. And don’t forget to show appreciation for their work — a little kindness goes a long way.
- Don’t Keep Them All to Yourself
When you find someone good, it is tempting to keep it a secret, but that’s not how this relationship works. Contractors need multiple clients for the economics to work out. So, if you value their work, be generous with referrals — your network will thank you for sharing, and your contractor will be much more likely to stick around.
The Bottom Line
Growing businesses need top talent who can bring strategic leadership to their teams, but they don’t always need (and sometimes can’t afford) full-time employees. Rather than hiring a few people and expecting them to do everything, consider outsourcing work to experts. That will allow you to manage your cash flow while gaining the skills and resources you need to grow and scale your company.
Editor’s Note: This is an updated article that was originally published on Forbes.