Outsourcing Bookkeeping: Why are Business Owners Against It?

There are plenty of resources about the benefits of outsourcing, yet many business owners are still resistant to outsource their bookkeeping.

Even businesses that outsource other activities tend to keep a tight grasp on their financial functions. Because cash flow is so important to small businesses, bookkeeping and accounting tend to be some of the last functions that business owners are willing to relinquish control of when they formulate strategic growth plans.

But why? Why are some business owners still against outsourcing their bookkeeping? 

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Control
The number one reason business owners choose to manage the various operations of their businesses themselves is simply because they want to retain control over these areas.  

Small business owners are type-A personalities, making them likely to have their hands in many different areas because they want a say in how things are being handled. They think the outcome will be better when they are at the reigns because they are confident in their own abilities and leery to hand off areas of the business.

Despite 97% of business owners claiming to be effective at delegating tasks as leaders, almost the same percentage (96%) admit they are sometimes “reluctant to let go of the reins and delegate.” The data backs this sentiment. Currently, 97% of business owners are managing at least one area of the company’s operations, and 34% of business owners are responsible for bookkeeping.

Survival Mindset
Business owners can get too busy with the day-to-day tasks of running a business to adopt a growth mindset and focus on long-term strategy, especially when they are doing too much. The risk of being stuck in the weeds is that business owners cannot look forward to plan for growth or seize available opportunities. They put off hiring decisions far too long because they do not have time to stop and take a breath and look at the bigger picture. Then, when they finally decide they are ready to get help with their bookkeeping and accounting, they must scramble to hire the right candidate quickly or find a third-party provider that is a good fit.

Cost
Small businesses are constantly looking for ways to manage expenses because cash flow is always tight. Business owners often think they are cutting costs by doing things themselves instead of hiring them out. However, outsourcing business processes can result in cost savings due to improved efficiency and business outcomes.

Furthermore, hiring a third-party provider is frequently less expensive than hiring the same personnel in-house. And in instances where cost savings do not result, the long-term revenue benefit justifies the expense. It is not unusual to see revenue and profitability increase substantially when outsourcing critical functions. In fact, one CEO interviewed for an Entrepreneur publication reported doubling her company’s revenue within the first year of outsourcing business tasks to contractors.

Pride
Business owners are a proud group - but the pride that they exhibit is born from a survival mentality, not hubris. Many are running companies that they have singlehandedly built with their own sweat equity. Shouldering this responsibility makes it difficult to business owners to admit when they do not have the skillset needed to keep the company moving forward any longer. As a result, they are not able to effectively identify their own strengths and weaknesses as it relates to growing business needs.

Many business owners struggle with the idea of delegating, but even when they are willing to do so, they often get pulled into overseeing areas of the business that they should not be responsible for, especially when it comes to bookkeeping and accounting. If you find yourself in this position, hire a reputable remote bookkeeper or accountant to manage your company’s day-to-day finances and aid in strategic planning discussions.