Outsourcing for Small Businesses

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Outsourcing for Small Businesses

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This is John and Sarah

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They both design, manufacture and sell decorative wire thingamajigs. 

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John does it all himself.

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Sarah has a different idea.

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She draws up a detailed task list of everything that needs to be done to make her wire thingamajig business a success.

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She places the tasks in three categories:

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1. Core competencies and capabilities that will make her thingamajigs the best in the industry (innovation, design)

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2. All the other thingamajigs creation tasks: such as research, manufacturing, assembling, packaging, quality control.

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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)

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Her core competencies and capabilities she keeps in-house.

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The other thingamajig creation tasks she will incrementally start outsourcing to free up time to spend on her core competencies and capabilities

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The rest of the tasks she will immediately outsource so she can free up as much time as possible to focus on generating revenue.

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John is fully booked, working 16 hour days and producing forty thingamajigs and month.

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Sarah is also fully booked. She spends around 70% of her time on innovation and design…

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…and 30% on managing her clients and resources.

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She produces 400 thingamajigs a month and continues to focus on expanding her collection of designs.

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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

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Sarah appoints two new designers and her business is into its next growth phase.

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The Main Benefits of Outsourcing:

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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

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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.

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You can dynamically scale your business to fit the current workload without increasing your direct costs

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It makes your business more flexible to changes in the marketplace

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The Dangers of Outsourcing:

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Quality risk. The resource might simply not be capable of producing the quality you and your client expect.

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Communication issues. The resource might interpret the brief differently or make the wrong assumptions where things were not specified.

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No direct control : Outside resources set priorities according to what is best for their business

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No commitment to the bigger picture. The resource might simply execute your instructions and not care to find the best possible solution

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It takes time to build up a good network of resources. NO PAIN – NO GAIN

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How to start the process

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Get into the right mindset. Stand outside the business. Be a manager.

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Identify all the tasks required to make the business a success

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Group the tasks into: your core competencies and capabilities (keep inhouse),

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the rest of the tasks required to create the products and service on offer (outsource incrementally) and

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everything else needed to make the business function (outsource ASAP).

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Identify the right resources – Remember this: contractors will often say anything to get the job, so be cautious.

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Know what you are looking for

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Ask people you know for referrals

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Ask those in your social media networks for recommendations

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Do online research on potential resources: check their clients, testimonials and case studies

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Utilise virtual market places such as oDesk, eLance, etc

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Remember: you get what you pay for. People will even do things for a fiver

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Making it work

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Discuss your requirements and expectations

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Before the project starts make sure you have an agreed Statement of Work in place. Requirements, Expectations, Scope, Schedule, Costs, Payment schedules, Deliverables

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DO NOT ASSUME ANYTHING. Make sure that you have stipulated ALL the details of the project.

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Keep a paper trail of everything.

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Don’t micro-manage but keep on top of progress

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Catch anything that’s off track as early as possible

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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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