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Outsourcing for Small Businesses
This is John and Sarah
They both design, manufacture and sell decorative wire thingamajigs.
John does it all himself.
Sarah has a different idea.
She draws up a detailed task list of everything that needs to be done to make her wire thingamajig business a success.
She places the tasks in three categories:
1. Core competencies and capabilities that will make her thingamajigs the best in the industry (innovation, design)
2. All the other thingamajigs creation tasks: such as research, manufacturing, assembling, packaging, quality control.
3. Other tasks that are essential for the business but simply don't make sense for her to deal with personally (book keeping, payroll, HR, marketing, sales, social media, blog writing)
Her core competencies and capabilities she keeps in-house.
The other thingamajig creation tasks she will incrementally start outsourcing to free up time to spend on her core competencies and capabilities
The rest of the tasks she will immediately outsource so she can free up as much time as possible to focus on generating revenue.
John is fully booked, working 16 hour days and producing forty thingamajigs and month.
Sarah is also fully booked. She spends around 70% of her time on innovation and design…
…and 30% on managing her clients and resources.
She produces 400 thingamajigs a month and continues to focus on expanding her collection of designs.
When an order for 4 million thingamajigs arrives John can’t deal with it, but Sarah simply upscales her network of resources to deal with it
Sarah appoints two new designers and her business is into its next growth phase.
The Main Benefits of Outsourcing:
It frees up your time to focus on what really makes your special and as you focus on what makes you special you will start out-classing the competition
It gives you access to the time, skills and experience of others without having to appoint or train them. Internal staff might also benefit from this exposure.
You can dynamically scale your business to fit the current workload without increasing your direct costs
It makes your business more flexible to changes in the marketplace
The Dangers of Outsourcing:
Quality risk. The resource might simply not be capable of producing the quality you and your client expect.
Communication issues. The resource might interpret the brief differently or make the wrong assumptions where things were not specified.
No direct control : Outside resources set priorities according to what is best for their business
No commitment to the bigger picture. The resource might simply execute your instructions and not care to find the best possible solution
It takes time to build up a good network of resources. NO PAIN – NO GAIN
How to start the process
Get into the right mindset. Stand outside the business. Be a manager.
Identify all the tasks required to make the business a success
Group the tasks into: your core competencies and capabilities (keep inhouse),
the rest of the tasks required to create the products and service on offer (outsource incrementally) and
everything else needed to make the business function (outsource ASAP).
Identify the right resources – Remember this: contractors will often say anything to get the job, so be cautious.
Know what you are looking for
Ask people you know for referrals
Ask those in your social media networks for recommendations
Do online research on potential resources: check their clients, testimonials and case studies
Utilise virtual market places such as oDesk, eLance, etc
Remember: you get what you pay for. People will even do things for a fiver
Making it work
Discuss your requirements and expectations
Before the project starts make sure you have an agreed Statement of Work in place. Requirements, Expectations, Scope, Schedule, Costs, Payment schedules, Deliverables
DO NOT ASSUME ANYTHING. Make sure that you have stipulated ALL the details of the project.
Keep a paper trail of everything.
Don’t micro-manage but keep on top of progress
Catch anything that’s off track as early as possible
Remember, this is about freeing up your time to focus on your core competencies and capabilities and running a successful business.
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