With start up business there can be a tendency to do everything yourself; whilst this is one avenue you can go down, is it necessarily the best for you? What is the opportunity cost of doing things yourself?
Running a small business involves a range of disciplines, from sales and marketing, book-keeping, credit control. as well as the higher level functions such as business planning and strategy, to name but a few.
Whilst technically you can learn to master every aspect of running your business there are many advantages to getting help with such tasks. That may be from an individual such as a freelancer or virtual assistant, or a specialist company e.g. an accountant, SEO, marketing, web designer etc.
One thing we come across as accountants is business owners overlooking the Opportunity Cost of doing something yourself. Instead waiting until they are a certain size, or have a certain income first.
What is Opportunity Cost?
opportunity cost is the cost of not doing the alternative choice. This is best illustrated with an example. E.g. where there is a choice between spending your time doing your book-keeping or spending it doing chargeable client work. If you choose to spend your time doing your book-keeping the opportunity cost of that is the “cost” of the chargeable client work you have not done.
As a business owner it is important to value your time and focus on the areas in the business where you have the most impact.
Assessing the opportunity cost and comparing that with the cost of outsourcing a particular business function to a professional should allow you to clearly work out and see the cost savings that can be made. E.g. If generating new business is where you have the most impact and you create £80 per hour spent doing this. The cost saving of outsourcing admin at £20 per hour instead of doing it yourself is £60. Whilst that may be easy to see in an example, real life isn’t always as clear; but does often come with other advantages.
Time & Expertise
No-one is great at everything, by outsourcing a task to the right person often results in greater expertise and time savings compared to doing it yourself.
Having external resources increases the flexibility in your business; if you suddenly get a lot of work it is much easier to scale up.
Where to find freelancers?
Sites like peopleperhour.com and fiverr.com are a good starting point depending on the task. Better yet, ask your network for recommendations – see someone with a good logo – ask who did it. If it is accountancy you need help with Contact us here.
Overall, outsourcing and using external resources allows business owners a flexible way to free up their time to focus on what they do best, or enjoy the most.
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