Do You Know When to Outsource?
Most small businesses and solopreneurs use outsourcing only when they don’t have the knowledge, skills or equipment to handle the tasks themselves. I call it the “absolute advantage” outsourcing. If you ever hired an accountant, a web designer or a lawyer, you are familiar with this concept.
Of course, most of the time, entrepreneurs have both the software/tools and the knowledge to get the work done themselves. For example, I know how to maintain my blog and even have time to do it myself (ok, most of the time, anyway). Why does it make any sense to outsource then? Is it still a wise business decision to pay someone else for the work you can do?
It does make sense if you think in terms of comparative advantage. Even though a business owner might have the three Ts – tools, time, and technique – for accomplishing tasks, outsourcing might still make great sense.
Outsourcing Saves Money
I once worked for an employer who desperately needed a part-time in-house bookkeeper, but couldn’t afford one. Getting an outside vendor – a freelance bookkeeper – to help out would’ve been a lot cheaper.
And you don’t have to go for the lowest bidder either to see the savings. Instead, concentrate on getting top-quality vendor who will work offsite. Even if this vendor’s hourly rate turns out to be the same or somewhat higher than an hourly salary of an in-house employee, you’ll still save on payroll taxes, benefits, HR and legal expenses, and various office expenses (from having to rent a bigger space to adding a phone line and buying new computers and software).
Outsourcing Helps Deliver On Time
Are you at a bursting point in your business? Have you had to turn down new clients or requests because you can’t complete all the work yourself? Or have you been staying up ’til crack of dawn trying to get it all done by yourself?
Instead of turning down new requests or working 24/7, you can outsource some of the work and still make money and build your client base. Having a network of reliable vendors is especially crucial for businesses with fluctuating workload. On the days or months when you have too much work, contact your vendors for assistance. And in between these times of plenty, simply do the work yourself.
Another benefit of outsourcing is to have a backup in case some unforeseen event prevents you from delivering the project by requested deadline. Unfortunately, as a business owner, you don’t get sick days or emergency leave. While many clients will show at least some level of understanding, they have their own deadlines to keep.
Outsourcing Lets You Accomplish More
Sure, given time you can learn how to run every aspect of your business yourself – from AdWords to web design (and everything in between). Now consider the amount of time it’ll take you to not just learn, but master each of the tasks and multiply this time by your hourly rate. If, instead of learning web design, you concentrate on what you do best – your core proficiency – and outsource the design part, you’ll be much better off financially.
Now, some tasks can be learned quickly. For example, it doesn’t take but a couple of hours to learn the basics of writing and submitting articles online. But to become really good at it will take months of continuous efforts. So it might make more sense to outsource this task to a copywriter or a virtual assistant.
And speaking of productivity… When a copywriter or a VA is working on your article, they give it 100% of their attention since this is their only responsibility. A business owner has a lot of other responsibilities requiring multitasking. And multitasking, regardless of how well you do it, is a lot less efficient.
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