A case for outsourcing

In the early days of running a business, often the business owner does a bit of everything. Looking after customers, sure, but doing the accounts, paying the bills, fixing the computer, cleaning up, sorting out problems and anything else that comes along too. The phrase, 'Chief cook and bottle washer' describes it well. From the interesting and important stuff to the plain boring and mundane, it all needs to get done...somehow.

As the business grows the business owner might start to bring in help. They then need to decide what tasks to let go of and what they need to keep hold of. Michael Gerber's, 'E-Myth' describes this dilemma well. He advocates that over time the business owner should delegate the 'technical' stuff and in due course, the 'managerial' stuff and end up being the entrepreneur who develops and guides the business. It's a difficult journey and many don't stay the course. Many stay stuck in the mire of dealing with technical matters, often where they are not an expert and fail to focus on developing their businesses.

A good solution can be outsourcing. Outsourcing is passing responsibility for a set of tasks to an external party, usually a specialist in this line of work. There are many advantages but these include:

• It's often cheaper than employing someone to do this work for you as you only pay for the support you need
• They are are experts and have the knowledge and resources to do the work better than you can
• It's scaleable - as you grow or contract you can adjust your level of support accordingly
• It leaves you to focus on the entrepreneurial stuff

 It's almost a no-brainer but I see many businesses of a reasonable size who deal with their own IT (if something breaks they get someone in to fix it), have no HR back up, do their own marketing (when they get time) and yes, do their own bookkeeping, payroll and VAT, not always in the most effective way

Since starting Base52 we made an early decision to outsource IT and HR support, website maintenance and aspects of marketing. I've never regretted this. It's a monthly overhead but I feel it is an essential cost of 'doing business'. Similarly we offer an outsourced accounting service to many of our clients covering bookkeeping, VAT, management accounts, payroll and well as year need compliance. I believe this arrangement works very well and many of these clients have stayed with us for many years on their business growth journey. 

I found this quote from a chap called Alphonso Jackson, 'The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it'. 

I think that's pretty good. Cost is also a factor of course (you'd expect an accountant to say that) but if it's affordable, I'm a big fan.

Outsourcing at Base52

Accountants aren't just for the year end

Many business owners have a 'once a year' relationship with their accountants. They do their own bookkeeping and VAT administration in house, maybe with a part-time bookkeeper and their accountant is engaged to prepare the year end accounts, possibly with a bit of payroll thrown in.

This arrangement can work fine, especially if you have a good and reliable bookkeeper. It may be more problematic if the in house bookkeeper is not very good or if they decide to move on. In the latter case, finding a replacement can be difficult and an overhead as the newbie learns the ropes and settles in.

So what about outsourcing as an alternative? Outsourcing all of your financial administration including booking and VAT to your accountants can have a number of benefits, including:

• Continuity - the firm you engage should have cover so that if there are staff changes, it's their problem, not yours
• Scalability - if you business grows or contracts they can adapt the level of resources (and costs) to suit your needs
• Synergy - as your accountants are dealing with your bookkeeping they should gain efficiencies on year end work, reducing costs
• Familiarity - with regular contact they get to know you and your business and what makes it tick. They can add value by preparing monthly or quarterly management accounts on the back of the bookkeeping work
• Certainty - you should be able to agree a fixed monthly fee for all the accountancy work so you can budget with certainty

For a small business, outsourcing can be a cost effective and attractive alternative to 'bookkeeper plus accountant'.

A high proportion of the accountancy support we provide at Base52 is as a comprehensive outsourcing package. We like it because we get to know our clients better and we think we can provide a more proactive service with regular contact with our clients.

Please see our website and video for more details

www.base52.co.uk/services/outsourced-accounts-and-tax