When to Outsource - Business Experiences
Multiple Companies Discuss Their Experiences When Outsourcing
Outsourcing is no longer just the province of the Fortune 500. Businesses of all sizes are utilizing outsourcing for a variety of reasons, everything from gaining expertise to cutting costs to spending more time on their core businesses.
But how does a business owner know what to outsource? What functions should you hold close and what should you farm out. What guidelines should you follow before outsourcing a business function?
We asked readers to share their tips and tactics when it comes to outsourcing. The following are some of the responses:
Todd Brand, Brand AMG
“If an outsider can provide a better finished product for our client, we feel somewhat duty-bound to bring that improvement to the client, particularly if it can be done cost effectively. Also, we assess the workload needed to maintain the current system and view that in light of the ‘highest and best use of the associate.’ If that function detracts from something better and more valuable that it could be doing, it’s on the outsourcing short list.”
David Biernbaum, David Biernbaum Group
“Too many small businesses fail because they lack the wisdom to outsource the training and development they need to be competitive in areas such as marketing, advertising, public relations, communications, and even sales and business development. My advice: keep those functions in house for which you have expertise and skills, but outsource for the expertise you need to gain market share and beat your competition. “
Dale Kardasz, Pridestaff
“If the task takes me away from being in front of my customers, I outsource it. Also, if the results of the task could negatively impact my business, I outsource it. For example, I outsource payroll because I am not a tax expert, and do not want to take a chance of under- or over-paying payroll taxes. I would not want to get a call from the IRS.”
Janet K. Poppen, Poppen & Associates CPA’s, P.C.
“The question to ask before outsourcing is, ‘What does it cost me in time to perform this function in-house; and what would be the alternative use of the time for the benefit of the business if I do outsource?’ If cost is not the only consideration, evaluate that other consideration, and see if there is an alternative to that function if you do decide to outsource, i.e., if I keep payroll in-house for my cost-accounting function is there an alternative way to get that information and eliminate the payroll function that is economically efficient?”
Bob Kramkowski, Innovative Strategic Solutions
“Ask yourself: ‘How will I sunset this?’ At the onset, thought must be given to how the function would be moved to another outsourcer or back in-house if it wasn’t working for some reason. This one question is probably the most often overlooked.”
Dick Shea, SBP Image Solutions
“You outsource whatever gets in the way of you or your people doing what the mission statement says. Do more of what you do best and outsource the rest. What do you get paid to do to grow your business? You must stay focused on that and spend you and your employees’ time doing what we call ‘A’-time projects.”
Shep Hyken, Shepard Presentations, LLC
“I always remember what Tom Peters said, ‘Outsource everything but your secretary and your cell phone.’ Seriously, as entrepreneurs, many of us started doing everything and some of us can’t let go. Doing things that other people should be doing keeps you from doing what you can do best. Example: Should I be typing up labels for our mail-order business, or should I be on the phone selling and creating revenue? Do the math! So, keep doing what you can do that positively impacts your business. And, shift all other responsibilities to someone else, inside or outside your company.”
Oreola Binuyo, Rescue A Book
“Business owners need to maximize their time and resources. So functions that are time consuming, complicated, repetitive and not directly related to what they are in business for are prime functions to outsource, e.g. payroll, accounting, housekeeping and IT support.”
Randall Fitton, StrategiCom
“The two rules that we have tried to live by at StartegiCom is No. 1: If it is not making us money, don’t do it. No. 2: Only do what you are good at and outsource everything else. Now, obviously we can’t outsource tasks until we have the revenue to cover it. But if I am spending time on tasks that are taking away my time from selling, then I am not going to like the end result either way.”
Dennis Kennedy, The Dennis Kennedy Law Firm, LLC
“Focusing on the ‘core business’ helps you make better decisions about outsourcing. What operations are not related to serving your customers and can be done better and cheaper by someone in the business of providing only those services? I suspect that before many outsourcing decisions have been made in businesses, someone stood up and said, ‘I don’t think that we need to be in that business.’”
Mark Turley, Technology Advisors Group, Inc
“Companies should hold close those business functions that give them a competitive or strategic advantage. Outsource those business functions that can be done more efficiently by others.”
Ivan James, UTS Envelope & Paper
“The main question one must ask is: ‘What is the benefit of outsourcing to my bottom line. That is what the value of outsourcing is to the profitability of my company.”
Lisa Paden, The Personal Gift Basket Company
“I always say ‘stick with what you know.’ This has always worked for me. Even being a small business, I still find that there are so many things that I personally am not good at. When something is not your strength, find someone who can do it better so your time is not spent fixing things you had no business touching.”
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