4 questions to ask before you outsource

4 questions to ask before you outsource

Outsourcing, when done right, can help gear up your business to be more productive and profitable, but how do you know if and when you should do it?

The key advantage of outsourcing is that it allows you to contribute to the overall health of your business by investing in resources and activities that are more profitable. It opens up a world of talent to small businesses, allowing for more avenues to be explored.

Here are four questions you should consider before you outsource.

 

1. What tasks are central to your business?

Time is of the essence when you’re a small business owner, but many believe they can do it all, all the time. You can’t—at least, not consistently well over a long period. As a business owner, you need to know what your core business is and where your strengths lie and use outsourcing to not only free up your time to focus on those strengths but hand over tasks to someone who can do it better than you.

When to do this depends largely on when you feel those ancillary tasks are starting to take up too much time and effort away from your core business.

 

2. Can you do it well enough in-house?

Borderline cases are those where the time spent is negligible and/or the activity is not a priority. For instance, it might take you half an hour a day to run your social media; it’s not a high priority and not enough time to take you away from revenue-generating activity, therefore difficult to justify outsourcing someone to do it.

The other argument for not outsourcing is if you want to build in-house capacity for the activity, in which case many business owners often do it themselves ‘well enough’ until they hire a person for the specific role. The task may also be complementary to the revenue generating areas of the business, in which case doing it could indirectly add to the bottom line.

 

3. Is it cost-effective?

It might seem cheaper for you to do the task yourself, but if you estimate your hourly fee and look at how long it took you to complete the task, it may become obvious that it’s not cost-effective at all!

If you could be earning $150 an hour in the three hours it takes for you to do your accounts, for example, and a bookkeeper, because s/he is more adept at the process takes two hours to do it, even if the bookkeeper charges as much as you do, you’ve earned $450 in that time and paid $300 with a net gain of $150 instead of not earning any revenue at all.

 

4. Is it a weakness?

Business owners too often focus heavily on lowering costs instead of raising results. Be realistic when outsourcing, and be prepared to pay someone for his or her expertise. Areas that can be outsourced successfully include PR, email marketing, SEO, personal/virtual assistance and bookkeeping.

And let’s not forget that working to your strengths leads you to be more productive, resilient, creative, innovative, proactive and satisfied.

Once you have assigned the job to someone else, it is not a matter of dropping the task entirely. Rather, a steady line of communication should flow between you and the contractor to ensure you’ve established your expectations—and they prove they can meet and/or exceed them—and you continue to benefit from the arrangement.

All in all, outsourcing should increase efficiency and effectiveness, and the revenue generated should be significant enough to warrant the cost of it in the long run.


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