If It Doesn’t Fit – Outsource It

Small Businesses can be great examples of efficiency.  Lean operations focused on providing a product or service without masses of unnecessary staff or expenses.  Those same small businesses can be extreme examples of inefficiency as ill-advised owners expand their employee population with unnecessary and on many occasions wasteful staff. 

A small business has several things that it must focus on.  There are 8 to be exact; 

Product/Service Management – Responsible for the management of cost to produce/provide, product pricing, supply chain and materials management

Production – Responsible for quality, elimination of error, ensuring that what is delivered is what was promised and that it works as promised

Marketing – Responsible for market research, costing/pricing, generation of leads

Sales – Responsible for closing sales on new customers/consumers

Customer Service – Responsible for processing new orders, upselling value added product or services, managing orders

Customer Retention – Responsible for repeat customers, preventing and recovering lost customers

Waste Management/Elimination – Responsible for productivity and efficiency, waste reduction

Team Building – Responsible for employee engagement and incentive.

Those areas are all designed to accomplish two key things for the business; to reduce costs and to increase revenue.  Operating together they not only speed up the growth of the business, they ensure sustainability of the business.  For a small business, any activity not a part of these 8 functions doesn’t belong on your payroll.  That is correct, they do not belong on your payroll; you pay for them, as needed, by outsourcing them.

 So what specifically should a small business outsource?  While many functions can and should be outsourced, the main ones are part of a not very long list;

Human Resources – small businesses, especially those under 100 employees, have absolutely no need for an HR function.  Staffing Agencies and payroll providers offer many if not all of the services an in-house HR function can bring.  Further, they are more affordable and have a higher level of expertise.

IT – a small business should have a good external resource, on demand, to maintain and sustain its information technology tools and systems.  Given the fairly high reliability of these tools, and the ability to access them remotely, in-house IT support is unnecessary and costly for small business.  A good relationship with a provider of these services is both a cost saver and a good investment.

Accounting – you need these services about once a month and at tax time.  In many instances, you only need an accountant at Tax Time and a good Book Keeper is a more affordable and realistic option.  Items like invoicing can either be handled by a Book Keeper or your Customer Service and Sales functions.  A good Accountant or Book Keeper, while invaluable, isn’t something you need on your payroll.

Transportation – if you ship your product you don’t need a fleet of vehicles to do this with.  A relationship with a shipping service or local delivery company becomes a more economically smart way to conduct business.  The costs of purchasing, maintaining and ensuring a vehicle or small fleet of vehicles can be significant.  Let a company whose mission is to provide these services manage that and charge you a more affordable fee than doing it yourself.

 Outsourcing these activities give you the ability to focus on your core business, that thing you do and you started your business to do.  Your resources are not limitless, nor is your time and energy.  Outsourcing allows you to shift your focus from less critical activities to those with greater priority and purpose.

Review your business operations and look closely at how each activity you have supports your core business.  How often is it used? Is it necessary?  Is it on your payroll?  Are you using it every day to accomplish the core mission of your business?  If not, it just became a candidate for outsourcing.  Changing what were fixed costs of doing business to variable costs of doing business is a highly efficient way of controlling your budget and growing your company.  Being profitable and growing should be a key focus; this is one way of accomplishing both.