Today’s economy is an outsourcing economy. It’s no longer uncommon for successful businesses to outsource and even to run entirely virtually. This change in business models is due in part to a shift towards individual skills as commodities. As a result, the ability for small businesses to outsource projects or even entire departments has become easier than ever in today’s market.
Outsourcing is a powerful tool for small businesses, it’s a viable way to grow, and without it many businesses would simply stagnate. There is no doubt that successful small business owners are leveraging outsourcing to increase profits and scale their companies in today’s economy.
What is outsourcing in the context of small business and scaling?
Outsourcing is simply the utilization of talent or sourcing of products through partnerships and third party relationships as opposed to hiring or manufacturing in-house.
I have discussed this topic with dozens of successful small business owners over the past few years, and most of them agreed that if they had to start all over they would use an outsourcing model immediately as opposed to hiring employees for certain projects or jobs in the beginning.
However, discussions with smaller or startup companies have made it clear that while they agree with the idea of outsourcing, there are a few issues that can get in the way of moving towards a business model that incorporates outsourcing.
One huge roadblock is mindset, does the leader of the business see him or herself as a “business owner” or “entrepreneur”? This is a fascinating subject as it’s a powerful psychological distinction. A business owner may be reluctant to scale their business due to unknowns, but an entrepreneur understands that outsourcing can be the key to profitable growth. For more on this topic, check out David Finkel and Stephanie Harkness’ book, “Build a Business, Not a Job!”
The other issues small business owners seem to have fall into two main categories – what to outsource, and how to find the right providers.
What type of projects should I outsource?
A challenge for many small business owners is the concept of what work to outsource. There may be discomfort with letting an outside party produce work that will reflect on your company. Combat this by ensuring that there are clear processes and quality checks in place.
One exercise that is extremely helpful is to take an hour or two and list each tasks in each project type that your company offers, even the small tasks. Then break out at least a few items on that list that can be handled by someone else. This will help you determine which processes require a specific set of expertise (usually this is your company’s core service) and which only require a person to be trained to do. You can find a virtual assistant or project manager to take on these “trainable” responsibilities.
Examine your list of responsibilities and determine which ones you and your team like to do and/or are great at doing. Try and outsource all other responsibilities to people or companies who excel in those areas that you don’t.
Separately, create a list of the work that you know needs to be done but is not currently being done by anyone in the company. That can include things like marketing tactics, lead generation, or website upgrades. These are clearly things that can be outsourced.
The responsibilities that should never be outsourced by small businesses include higher-level decisions such as vision, strategy, overall financial management, or final say in hiring. It’s the process-oriented projects such as bookkeeping or CRM management that can and should be outsourced.
How do I find the best outsourcing partners for my small business?
This may be the biggest challenge for most small businesses, how to find the right partners. The main thing to do when outsourcing any aspect of your business is to do your homework and be thorough in your interview process.
If you’re a locally based business, look for local partnerships and companies. Ask for referrals from other business owners or peers who are executing a task well. Attend trade specific events. Ask a marketing consultant. If you are a marketing consultant, help clients find partners that will help move their business forward quickly, such as high quality web or graphic designers, content creators or SEO specialists (or execute these tasks on their behalf).
For small businesses looking to outsource services, one tip is to look for a small team or company to work with as opposed to freelancers or larger agencies.
Freelancers can be useful if you’re a startup with a very small budget, but they’re difficult to rely on if you want to scale a company, freelancers get jobs and disappear, are often unreachable, and tend to excel in only one aspect of what needs to be done.
On the other end of the price gamut, agencies are another option but be careful here as well, you may pay more than necessary, and if you’re a smaller business then your projects are often put on the backburner while larger clients take priority. However if your project is highly complex or requires a number of different people to execute then you may consider a larger agency.
Hiring overseas providers can work out well if you’re extremely careful and thorough in your research and interviews. First, determine whether your business would benefit from using any overseas providers or if you need (or prefer) to work with U.S. based or local providers. If you do hire an overseas worker or company, ensure that there is a strong process on your end for editing or quality control. Most of the horror stories we have all heard revolve around mistakes that could have been caught earlier with the right review process in place.
Whatever choice you make, do not get caught up in the self-defeating trap of trying to do everything yourself for as long as possible. You are missing out on revenue opportunities and the ability to grow your business quickly.
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About the Author
Brooke Patterson is a Brand & Marketing Strategist and CEO of Vandermedia Design & Marketing, a creative services and marketing company based in Carlsbad, CA. Having worked with companies such as the San Diego Chargers, Ford, PXG and Centerplate, Brooke uses her experience in high-level branding and marketing strategies to transform her clients’ small businesses.