Outsourcing – Use All the Tools You Have at Your Disposal
Do you know why most small businesses fail? The common theory is lack of funding, but I disagree. I believe it is because people go into business to do what they love to do or what they do best without realizing how much time they need to devote to things they don’t like to do or don’t know how to do. What things, you ask? Well, quite a few come to mind – bookkeeping, computer maintenance, database management, marketing/telemarketing, graphic design, making deliveries, preparing mailings, processing payroll, and the list goes on. Worse yet, most people are afraid to admit they don’t like or don’t know how to do some of these things and don’t know where to turn for help.
Most business owners think they are saving money by trying to do everything themselves. When considering outsourcing jobs to outside vendors, business owners seldom realize how much of their time can be saved. It’s difficult to accurately calculate the full impact this has on your bottom line, but you can draw some logical conclusions. The question to ponder is: “What is the cost of the vendor versus the value of my time?” Let’s say that you commit to yourself that in exchange for hiring this vendor, you will spend an equivalent amount of time (i.e., an hour of your time for every hour you pay the vendor) on income-generating activities. When you spend time on these activities, you can generate $120 of income per hour. The vendor you are considering engaging will cost you $60 per hour. Just a simple calculation would show you this transaction is likely to pay for itself (based on a 50% profit margin for easy math). The reality is, however, that the vendor is likely more qualified and able to complete these tasks in half the time, or better. So, consider that you are paying a vendor $60 to do work that would decrease your income by $240 if you were to do it yourself. Now you are actually making a profit on this transaction! So what if the vendor could complete the work in one quarter of the time it would take you?
Ironically, business owners are reluctant to let these tasks go for fear of “losing control”. Who are we kidding? Can you honestly look at stacks of receipts and convince yourself that your financial records are under control? Can you look at boxes of business cards and feel comfortable with your contact management “system”? No, no more than you can argue that making your own deliveries is the best use of your time. And yet, this is what we do, probably because we believe it is uncomfortable to ask for help. But, consider this – the professional is in their business for at least two reasons: 1.) They see a definite need for the service they are providing (translation: “you are not alone”) and 2.) They have expertise in this area and can do an excellent job for you (translation: “we can help!”). How comforting is that?
Furthermore, you not only have little or no control over these areas of your business, but because these areas of your business are out of control, it is affecting every area of your business. You are stressed, and while you are performing all your other duties, these things are tugging at your mind – and you may even be losing sleep over it all.
So, what’s the answer? OUTSOURCING is the answer!
Where do you start? I suggest you start with the things that cause you the most stress. The areas can be tasks you dislike doing, things you don’t feel you have time to do or areas where you feel your expertise is weak. For most business owners, one task that falls into all three categories is their financial records. Money is like the elephant in the living room – everyone knows it’s there and works around it every day, but they refuse to acknowledge it and would certainly never discuss it. But, every time you go into the living room, there it is – as big as life! The question is: Is it doing any damage? How would you know?
For some, it might be easier to start with something less intimidating. How about hiring someone to clean your house? Let’s say it takes you 5 hours to clean your house. Would it be worth it to you to commit to spending that same 5 hours on income-generating activities so that you don’t have to spend that time cleaning? O.K., so maybe you like cleaning (bless your heart!) and cooking is your least favorite, most time consuming task. So, you could hire a personal chef to come in every other week for 4 hours so that all you have to do is take the meals out of the freezer and pop them in the oven! At the same time, you are increasing your income by four times your hourly rate.
A very common problem among small business owners is being stretched too thin to be able to effectively handle all the tasks necessary to manage their business. It’s a slippery slope. One area falls behind and others are sure to follow. So try to view these options as positive alternatives. Don’t focus on how things are, imagine how they can be and seek out a professional than can make it happen. Shore up the foundations of your business by reaching out to experts who can help you make your business soar!
Submitted by:
Doralee Billings