To establish a new business or expand an existing business is a particularly costly process, requiring large amounts of capital. This capital must be supplied from within the company itself, by investors in the company or by borrowing from a financial institution. However, with the current unfavourable economic conditions that are being experienced around the world capital can be particularly difficult to come by. Financial institutions are more cautious than ever when lending money and reduced profits result in reduced internal capital. Therefore, establishing a new business or expanding an existing business can be severely hindered by a lack of capital.
However, many companies are presented with another option when capital is scarce: to outsource services. The vast majority of expenses that are incurred when establishing a new business or expanding an existing business are due to the need to establish infrastructure. Moreover, once this infrastructure has been established it must be operated and maintained in order to be used effectively. The costs associated with establishing, operating and maintaining a significant amount of infrastructure are considerable but they can be removed altogether by outsourcing essential services such as mailing fulfilment and website payment processing services.
By outsourcing such services companies save vast amounts of money, thus rendering business plans viable that were previously considered to be impossible. Mailing fulfilment is a prime example of this. If a company were to provide such a capability internally it would need to purchase extensive storage facilities to house all of the stock required for a period of operations. Moreover, it would also need purchase extensive equipment to manage the dispatch and stock control processes. The initial outlay would be extensive. Furthermore, the company would need to employ staff to operate such systems and would also need to maintain such systems. The combined cost of initially establishing this infrastructure and also operating and maintaining it would be enormous.
However, if the same company were to outsource its mailing fulfilment services its costs would be considerably simplified and reduced. First and foremost, the initial acquisition costs for that particular service when either establishing a new company or expanding an existing company would be eliminated entirely. Thus, the company’s requirement for capital would also be eliminated. Secondly, the costs that would be incurred by the company when operating and maintaining the service would be replaced by a single outgoing. This outgoing would pay for the outsourced service and would represent the only expense for the service for the company.
Outsourcing critical processes within a company can ensure that a business plan is viable and attainable either when establishing a new company or expanding an existing company. Outsourcing such processes can eliminate acquisition costs entirely as well as considerably reduce regular ongoing costs. This can deliver considerable cost savings to the company and reduce the overwhelming pressure upon the company to source capital for the new venture. Outsourcing services can present an extremely attractive option and simplify and reduce regular outgoings.
This article was written by Amy Fowler on behalf of Hallmark Consumer Services. Amy writes on a variety of topics including mailing fulfilment services and other ways to reduce business costs.