Should I Consider “Outsourcing?”

“Should a small solo business owner outsource any of his operation?”

Many small business owners ask this question for various reasons:

• They don’t feel they have the technical skills to set up and manage a computer driven online business
• They may lack skill or authority in a particular topic or subject
• They may not have the time to accomplish all the daily execution tasks necessary to run a business
• They need others to bring writing or creative skills to the business as that is not where there personal talent lies
• They may desire a hands-off business so they can devote their time to other pursuits
• They may decide to outsource certain functional areas of the business like customer service, marketing, or fulfillment so they can focus their attention in other areas

A lot of small business owners would reason that because their business is very small and specialized, they ought to try to save money and increase efficiency by keeping all operating functions in-house under the watchful eye of the owner.

Why trust important activities like communications, product development, customer relations, financial management, or fulfillment to an outside firm or several firms that won’t have the same concern over these functions that the owner would?

Here are five good reasons why every small business owner ought to at least consider outsourcing some parts of his operation:

1. To increase business speed. One of the key advantages of solo business is the fact that the owner can make critical decisions extremely fast. When a new trend surfaces, the owner can jump right on it and secure “first mover” advantage. When his customers tell him about a new product they want, he can quickly move to fulfill that desire. The fewer internal operations he has to worry about, the more time he’ll have to spend in product research, development and marketing.

2. To increase business flexibility. Very few successful businesses were catapulted to that elevated position selling the products and services that they initially offered. Most seem to have seized emerging opportunities that surfaced once they were in business in other areas. Flexibility is a huge advantage to solo businesses that learn to recognize customer demands in associated products and lateral markets.

3. To save money. Maybe this reason is counter-intuitive, but consider this simple example. A business owner has the choice of spending a great deal of his own time dealing with customer questions, support issues, and keeping contact information and customer mailings in order. Alternatively, he might outsource his customer relationship management function to a call center at a very competitive price (less than what his hourly in-house cost might be). Which alternative might make the most financial sense?  (Note:  As of this writing, outsourcing to professionals in a developing country can be done for around $500/month, much less expense that hiring full time employees)

4. To take advantage of customization and expertise. Purchasing the latest high tech software, learning how to set it up and use it, and then dealing with support issues, new updates, etc. can be an expensive and time consuming proposition. Would it be more advantageous to use an ASP (application service provider) in such a case? Instead of buying expensive software that will become outdated, need technical support, and have to be hosted on the company server, would it make sense to employ an ASP that would set up, host, service and update its software at a fraction of what licensing a purchase would cost? Would it save time to have experts in the product help to customize your own unique solution?

5. To make up for owner deficiencies. No small business owner that I know is competent in every aspect of his business operation. Limited knowledge or understanding, lack of time, and even a lack of desire to perform certain routine but necessary functions are deficiencies or gaps in the business operation that can be plugged with outsourcing. Let’s say that the owner has little knowledge of, or personal interest in being the company webmaster. This is not a function that the solo operator wants to hire an employee to oversee. The obvious solution is to outsource this separate function to any one of many web site management companies or freelancers. The owner gets the expertise and help he needs without having to pay an employee a full time salary, benefits, and worry about worker’s comp, payroll taxes, and all the strings attached to regular employers.

Outsourcing may be the very best solution to the dilemma the solo operator faces as he decides how to leverage his own personal time in order to handle all the many operating issues that small business requires.

To your online business success,

Steve Browne

www.SteveBrowneDirect.com