“Do what you do best and outsource the rest.” —Peter Drucker
At some point, business owners come to the harsh realization that they simply cannot do it all. They get worn down: There are too many hats to wear, too many balls in the air, too many proposals to write, too many invoices to send out and “… oh wait, did I forget to pick up the kids at school today?”
Successful entrepreneurs understand that although you need to know how to do each job in your company, in order to be grow your business, you need to get working "on" your business as quickly as possible.
I recently spoke about outsourcing with Laura Novak Meyer, a professional photographer and small-business owner. For her, as well as many other service professionals such as doctors, lawyers, contractors and plumbers, time is money. In fact, time is more valuable than money. It’s the only currency that matters. I asked Laura how people in her profession can effectively grow their businesses given the finite amount of time they have in a given workweek. Her reply echoes the sentiment of Peter Drucker. "Never do work you can outsource for $10 to $12 per hour; make sure you are always doing the $80- to $100- an-hour jobs. If your average billable hour is $100 and you are doing work that you could be paying someone $15 an hour, you are losing $85 an hour in revenue."
The Doctor Will See You Now
If you’re considering outsourcing part of your business, start with a thorough examination but don’t do it yourself. Sit down with your attorney, accountant or business coach. If you don’t have anyone, it may make sense to hire a consultant. Segment your business into six parts: sales, administration, IT, marketing, accounting and operations. Determine which areas are being under-served and could use help from an outside partner.
Pick Your Partners Carefully
When outsourcing, remember that, in some cases, these partners may represent your company. Be thorough and selective when it comes to choosing vendors. My one rule for outsourcing: Don't include revenue generation unless there is absolutely no one in your company who can sell the product or service. Revenue fuels your business. Don’t hand off such a critical component to a company that may or may not be able to give you the time and attention you need in order to overcome all obstacles in making a sale.
RRR: Regularly Review Relationships
The single biggest mistake business owners make in outsourcing their business is not keeping on top of vendors doing the work. A common assumption is: "I hired the best company I could find to do our bookkeeping and invoicing and they're getting the job done." Yet, it doesn't always work out that way. You don’t want to realize that six months after hiring a company, all they did was make things worse, and now you have to work double time just to play catch up.
After hiring a company, schedule regular meetings, either weekly or biweekly, to review the work being done. It may cost you a few hours every month, but consider it your insurance policy—it can save you big in the long run.
Overall, don’t spend too much time and money on trivial issues, leaving you with too little time to deal with the more important business matters that will inevitably come up. Plan accordingly, and remember the words of Drucker: “Do what you do best and outsource the rest.”
Read more about small-business finances.