Today I want to talk about my second least favorite word in business. “Outsourcing”.
Now to clarify I don’t have an issue with outsourcing certain elements of a business. My concern with outsourcing is WHEN business owners outsource. I see so many new startups fall into a trap of paying other people to do tasks they could easily do themselves. Bookkeeping is a classic example. You’re a start up business, you may have 10 – 15 transactions in a month and with modern products like Xero why do you need to have a bookkeeper? Your accountant can show you what to do. Your accountant can set up the accounts for you so every month all you have to do is reconcile 15 transactions. It takes seconds but some people will pay £50, £60, £70 or higher to get that outsourced and then they wonder why they have a cash flow issue.
Outsourcing can be great, at the right time. A friend of mine Emma Del Torto of Effective HRM and I have had this debate many times. We have a slight difference of opinion, but I notice that Emma has developed a product that is really designed for startups. It’s a nice low entry point. Great value for money and leads up to a full suite of products for the larger businesses. And that’s how outsourcing should be done. Companies should have something that is tailored for the start ups.
If I use my bookkeeping example then as a bookkeeper you could do a small training course just to get those new start up businesses going. As they expand and get busier and they’re spending two days a month doing their bookkeeping they’ll come back to you and they will hire you. Which will be the right time because they will be able to afford it. But in the meantime if you’re somebody that provides an outsourced service think about those startup businesses. What can you offer them to get them on board with you as a company so you can start building the relationship.
If you’re a startup business think very carefully before you outsource any of your jobs because ultimately it’s not about what you like doing. Life isn’t about what we like doing. Life is about what we have to do and what we need to do and understanding our business and working within our business and understanding every element of our business. It’s one of the keys to being successful when you want to grow your business.
I’d love your thoughts outsourcing. I have a particular view hopefully I’ve articulated that for you.
What do you think about outsourcing?