When running their own small business it is not uncommon for people to find they are not only doing what they specialize in, but spending a lot of time in the role of head accountant, marketing person, payroll, IT, logistics and more. And you thought you were just a plumber, hairdresser, PR consultant etc! Clearly the common dilemma for small business owners is how you manage being all things to your business, when your real skills are simply in the area you are trained in.
Outsourcing is an increasingly popular option for many small business owners. While big businesses have been fast to adopt this trend, just because you are not operating a multi million dollar corporation does not mean that there may not be benefits for you in adopting this strategy also.
Running a good small business does not automatically make you a great accountant, PR guru or IT specialist if that is not your area of expertise. For this specific reason outsourcing can be more cost effective option. There are two advantages with outsourcing. One is the fact that outsourcing can free you up to focus on what you actually know, the second is that you can save money if you are considering having an expert work with you on accounts, PR, IT or other business related activities.
The area of specialty that you have developed is also known as your businesses core activity. When you are a specialist running your own business then it can be advantageous to find someone to take care of your non-core activities. These are the areas that you can outsource to save yourself time and money. By using an expert you can be concentrated on your core activities and limit the time you spend focusing on those areas that are outside of this.
The second way that you can save your money and outsource tasks for small business tasks is by outsourcing tasks in a way that allows for variable costs rather than fixed costs. Essentially what this means is that you shift the fixed costs such as paying for the services of a permanent support staff member, to a variable cost, whereby you pay an outsourced provider to carry out functions required as per an hourly rate. This means that you not only have the ability to obtain services at an hourly rate, but also the flexibility to get more than one service provider with different expertise as required.
Outsourcing small business tasks has become a much easier option as the internet allows for remote business services provision, telecommuting and access to service providers online. If you are dedicated to focusing on your core business activities, then it is worth considering your options with respect to outsourcing the non-core activities. Hiring specialists to undertake outsourced activities offers flexibility and can save you time and money, freeing your time up to grow your businesses core, specialist activities.
Collateral is defined as the asset or asset that you pledge to obtain credit, such as a personal or small business loan. Not only your house, but your car, your business equipment, a vacation home, a boat or other property can be used as collateral when you need secured lending.
The primary advantage of these secured loans, as opposed to unsecured loans (also called first charge loans in the UK, or signature loans) are that the interest rates for them are lower.
For those who are interested in starting a small business, however, secured lending might be difficult or impossible. Most small business people, especially the growing number of entrepreneurs and netpreneurs who are starting a business out of their home, they simply dont have the collateral to get that secured lending money.
Their home may already be mortgaged, they might be renters or they may not have enough equity in their homes. For these startup business hopefuls secured lending hopes must be replaced by the reality of equity financing.
When we talk about equity financing, as opposed to secured lending from the standard financial institutions, we are talking about money that comes from the small business owners private funds or from other individual or company investors.
A company that goes public and gets an infusion of money through the sale of stock is acquiring equity financing. Venture capitalist or angel companies are typical equity financers for small start up firms.
An entrepreneur who cashes in her 401(k) to buy a new business computer and printer, who spends his inheritance on manufacturing assembly parts, who uses his savings to buy small business equipment, or sells his classic car collection to lease a storefront location, are all using equity financing to fund their business.
Generally, as far as possible, equity financing is the preferred for a small business start up fund. It is far better to go this route than to begin with secured lending options that leave you in debt right off.
The other important factor in using your own money to start up your own company is that anyone else or any other firm considering investing in you will want to see that you are heavily invested in a practical as well as emotional way. Nothing shows this more than betting your own life savings on your new venture.
Even when you look for secured lending resources shortly after or farther down the small business road any lender will want to see that somewhere between one fourth and one half of the financial start up for your company came from your own funds.
That tells them not only that you are very committed but that you thought this through and prepared well in advance. If you are not willing to assume much of the risk, why, say these venture capitalists, angel investors and financial institutions, should we?
Both Deep Arora & James Copper are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Deep Arora has sinced written about articles on various topics from Site promotion, E Diet and Business Plan. Deep Arora is an Internet marketer with over 7 years of online experience and he teaches internet marketing from his blog at