When Should You Outsource To Help Your Business?
Entrepreneurs wear lots of hats. That’s a given. But there comes a time when an entrepreneur has to weigh the pros and cons of wearing all the hats versus outsourcing.
The pros and cons of outsourcing are simple.
PRO: You free your time to work on higher priority tasks.
CON: Outsourcing costs money.
So when is the best time to outsource?
As soon as possible.
Your business won’t survive, let alone thrive if you’re spending your time doing tasks that don’t really grow the business. Plus, there’s a very good chance that many of the tasks you’re undertaking are not your expertise, so they take longer, are more frustrating and subsequently cost you more.
- First, outsource operational and business management tasks; namely bookkeeping and accounting. Very few people are experts in these things, they’re time consuming but very important. Your business needs a good foundation, and part of that is a smooth running machine - so outsource bookkeeping and accounting as quickly as possible.
- Next, outsource website/blog design (unless that’s your business!) This will usually be a 1-time fee (unless you’re updating the site constantly), so bite the bullet and pay someone. Get it done right, and stand out from the crowd of standard looks and themes.
- Simple tasks should be outsourced next, even if they’re core to your business. For example, you might run a small ad agency. Part of your job might be tracking the metrics of the ads you’ve placed for clients. You’re also doing all the work, including the most basic ad designs. If you can hire a college/university student to replace yourself, do it. They might even work for free in exchange for a nice bullet point on their resume.
- Finally, outsource tasks that will take you eons to handle but will take an expert 5 minutes. Even if you’re a reasonable skilled plumber, your title is more valuable doing something else. Actually, that’s why plumbers can charge so much (but that’s another story…) The point is to avoid getting bogged down in tasks that will waste your time; bring in an expert, let ‘em do it quickly, build that relationship and pay them.
If you run a small business or you’re starting a new company there’s one thing you should be focused on: sales. Everything else is secondary.
Outsourcing costs money. So there’s risk associated with it. If you spend money you have to make money to pay those bills. But not outsourcing is a bigger risk. Find a way to do it. Spend the money. Barter. Beg. (Don’t steal, it’s bad.)
Outsource as quickly as you can. It’ll help your business succeed.
Excellent Post. I think this topic is a constant struggle for small business owners. When I had a full time office manager, it was wonderful. When she left, I did not want to go through the hassle of rehiring and retraining, so I took on many of the tasks and started outsourcing more.
I just started working with a client that offers virtual assistants that do many of these things and I am looking forward to trying them out.
The link on my name goes to their site for this post.
Yeah, yeah. I know. I’m certainly at that level. I’ve just been avoiding outsourcing. Perhaps I’m a little controlling. But times they are a changin’. I’m interviewing virtual assistants right now. And I’ve found a need for a transcriber. So, here I go.
The important thing to remember about outsourcing is that it is part of a bigger picture of working “On” the business rather than “In” the business. Therefore, the goal is to always be working in the highest capacity and to make that shift as quickly as possible. At first, you may have to do everything, but outsourcing can be seen as an incremental process that leads from the place of you doing everything, to the place of the business being able to run independently of its owner.
Always a challenge to figure out the best timing. But it is especially important when you are starting to build some momentum, then as Ben says, you either outsource or you lose momentum or wear yourself out.
Many small business people seem to struggle with the intangibles vs tangibles. The ROI of outsourcing can be difficult to quantify. But the money it takes to outsource is very easy to see.
The challenge becomes weighing a difficult to see benefit against an easy to see cost. I think that’s what stops most folks from outsourcing.
It’s short sighted, sure. But it’s what they can see.
In the last 3 months, I’ve been in “startup mode”…taking something I’ve done for more than a decade and doing it in a more formal capacity (Web site, blog, marketing, etc.).
Outsourcing has been a no-brainer for me, even though most of the things are tasks that I could do with moderate ease (with the exception of a custom design for my blog). I farmed out graphic design work to two friends; in the time they did their thing, I started and finished a freelance article. I needed some budget and expense tracking spreadsheets created, so I’ve farmed that out to my father (a retired accountant). In the time it will take him to do those spreadsheets, I’ll have another article started and finished. I’ll finish quite a bit more while someone redesigns my blog.
Starting up and running a business is hard enough without dragging yourself down with the tasks that you don’t like to do or that aren’t in your realm of expertise. If you’re only going to do something once in a while (like Web design), why learn it well enough to do yourself, only to forget most of it when you upload your site?
That’s one of the beauties of self-employment — being able to delegate the stuff you don’t like to do and keep everything that you enjoy doing.
Thx for the tip.I will put it in Blogg Buzz
Outsourcing is something I really need to do more of. I did outsource some last year, but I am not at the level of doing so for peak performance yet.
Thanks for the reminder.
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Great advice. I find myself doing a lot of the web promotion and design my self. It has taken away from other adverting methods, but since it is my first time it is always good to tackle it head on. I agree with you on the outsourcing as soon as possible statement. Also, communication is key when it comes to successful outsourcing!
Cola Tax & Solutions - Tax & Bookkeeping Service
Consider Tips of Outsourcing
1. Clearly define the scope and schedule for your project
This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverables you expect the vendor provide. Give vendors as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements - project schedules can have a huge impact on project costs.
2. Evaluate a service provider like you’d hire a full-time employee
When you’re evaluating proposals from service providers, don’t be afraid to ask questions. Just like hiring a full-time employee, selecting a vendor is a very subjective experience. Check their references and ask for feedback from other clients who have used their services. Engage in a dialog – if you have any concerns about a vendor’s specific capabilities, voice your concerns. Don’t just stew about it and hope for the best.
3. Look for specific experience fit
Ideally, the service provider you select will have specific experience with the type of project that you’re undertaking. You don’t want to be somebody’s “guinea pig.” This is especially crucial when outsourcing complex technical projects such as software development. For example, if you’re looking for someone to develop an application for the Palm PDA, make sure they’ve actually completed commercial projects on that platform for other satisfied customers. This advice holds true for other types of projects as well. If you need a business plan for opening a retail store, you’ll get best results if the consultant you hire has verifiable experience in the retail sector.
4. Don’t choose a vendor based solely on price
Though it might be tempting, never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid. Buyers report that their most successful projects are the ones where they felt the vendor offered a balance of good value and quality results.
5. Review portfolios and samples
Examine the vendor’s previous work (their “portfolio”) and make sure that their previous work meets your expectations for quality and style. If you’ve evaluated a vendor’s portfolio, references and previous experience and are still unsure of their capabilities, consider asking them to do a quick mock-up or provide a basic outline of a work plan. A service provider who really wants to win your business might be able to give you a rough concept so you can better understand their approach to solving your problem. But never cross the line between asking for a mock-up and insisting that a vendor provide you with finished work “on spec.” No qualified professional expects to work for free.
6. Start small
When engaging with a service provider for the first time, start with a project that is relatively small and simple in scope.
This will give you a better idea of the provider’s style and capabilities before you entrust a “mission critical” project to them.
7. Tie payment to clearly defined project milestones
Just as you should be clear about project scope, make sure that you define a work plan for your outsourced project with clearly defined milestones. Having scheduled checkpoints where you review the status of the project as it works toward completion—is an easy way to ensure that you meet your final deadline and that the final product meets your standards. Tie the vendor’s payment to these milestones. A good guideline for IT and software development projects is to pay no more than 20% to 30% of the total project price up front, with the rest of the payments awarded based on the completion of 3 or 4 milestones.
8. Negotiate ownership of work up front
For any type of outsourced project, make sure that you are clear about who owns the resulting work product and any important components of that product. Make sure the service provider understands how you intend to use the deliverables that they are agreeing to provide. For example, the development of a custom software application for your personal use would be substantially different from the development an application that you intend to package and re-sell.
9. Don’t forget about support after the project is complete
For technology projects, it’s a good idea to specify a warranty or support clause so that you are assured of some amount of continuing support from the vendor after the project is complete. It’s much easer to negotiate a support clause before the service provider begins work, rather than after the completion of the project. Even creative or business services can benefit from a support clause. Suppose you need some changes to a business plan based on feedback that you get from potential investors. Or maybe you find that you need that snazzy new logo delivered in a new type of file format. Specifying some amount of free support or negotiating discounted prices for future modifications can save you time, money and headaches later on.
10. Get it in writing
During the course of a service engagement, the scope of the project, deliverables or even the agreed upon price may change. Make sure that you clearly communicate any schedule, scope or payment changes to your service provider and get confirmation from them - in writing - that they understand and agree to the changes. Similarly, keep a record of any agreement changes requested by the service provider and whether you accept or reject those modifications. Save copies of any email exchanges that you have.
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