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How Outsourcing Can Be One Of the Ways To Lower Your Burn Rate

August 19,2016

Burn Rate is the amount of money your company is losing every month. In other words, money you need to lay out to afloat your business every month. This can be further divided into Gross Burn (total amount of money you are spending per month) and Net Burn ( amount of money losing per month).

Your net burn rate interests your Investors, as it is the indicator of how long before you will burn your reserves of cash.

Investors are always interested in your net burn rate, because it indicates the expectations an investor can put into your business while investing.

There are many ways to reduce your burn rate. Outsourcing can be one of the effective way to lower your burn rate. As a successful employer your aim should be to bring down your burn rate to zero or even less than that.

See how you can achieve this aim through outsourcing :

Increase Your Revenue

Increasing your profitability and revenue is one of the most challenging and obvious way to reduce the burn rate. Burn rate and revenue are inversely proportional to each other. You can increase revenue by focusing on the core competency and building new effective strategy for your business.

This will happen if the non essential tasks are outsourced to RPO service providers. You can not only utilize your time efficiently but a considerable amount of money can be also be saved.

Outsourcing will help you to consolidate all your recruitment requirements like space involved, training the new recruits and etc. hence saving your cost and further decreasing the burn rate.

Hiring According To Your Needs

Maintaining contractual relationship with your employees provides you with an easy platform to either replace or fire an employee without following the traditional way of human resource.

There are chances when you may require more human resource or guidance of expertize for a project. Your company needs an outsourcing service providers in that case in order to focus on the execution of the project rather than going through the recruitment process and searching for the right kind of technology required for it implementation.

You can further eliminate the costs associated with recruitment, management, training, taxes and retirement plans of the employees, which you will have to give a vital importance in case you are still sticking to the onboarding process. Avoiding fixed salary costs will decrease your burn rate. Outsourcing enables the smaller companies to uprise without any additional personnel.

The RPO service providers will ensure that you get high productivity and full value for the services you are paying for. Hiring a RPO service providers will rid you off of the following things:

  • Payroll Management

  • Retirement Plans

  • Worker Compensations

  • Compliances

  • Lawsuit

Outsourcing will help you to consolidate all your recruitment requirements like space involved, training the new recruits and etc. hence saving your cost and further decreasing the burn rate.

Access To Advance Technology

Outsourcing can provide you with advance technology without owning it. It enhance the productivity of the company and directly impacts the profitability of the company. It is highly expensive and time consuming to keep up with the innovative technology for gaining a competitive edge over others. It is important for all the professional staffing companies to maintain their clients by providing the best results. Outsourcing companies have vast idea about the market economy which helps the company to eliminate the the risk of making wrong financial decisions.

There are three ways to decrease your burn rate i.e, increasing income cash, decreasing outgoing cash or both. Your company can reduce the cash expenditure by outsourcing the selective services of the company which are not core to your business. This will result in substantial increase in company’s profit in a short period of time. Make a wise choice while selecting your RPO service provider in order to receive a exemplary customer service.