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Outsourcing Smartly To Cut Costs And Keep Your Reputation for Quality
Even the small, fledging business maintains a web presence of some kind – a blog, a website, listings on every social media site imaginable or simply a post on Craig’s List offering low cost accounting services in a geo-specific part of the 24/7, global economy.
The “small business best practices handbook” has been revised. A human no longer answers the business phone and we’ve all been caught in automated-call-center hell. In fact, it’s become the norm – unfortunately.
And while these trends all impact the small business in a significant way in terms of productivity, in market expansion and in required understanding of web marketing strategies, perhaps the greatest impact on small business practices is outsourcing.
More and more small business owners are outsourcing routine operations, running their businesses leaner. Today’s business owner can outsource anything. Need a virtual assistant to run day-to-day operations? You can find one on bid-fer websites like oDesk, Elance and other sites where virtual assistants post profiles and client feedback to help you select the VA right for your company’s needs.
You can outsource legal services, bookkeeping, accounting and tax preparation services, marketing and SEO services, site text copy writing services, all of the above or none of the above. You may simply require a data entry clerk. No problem. You can rent one, and at a lower cost.
Staff is expensive. Salaries, benefits, lost productivity due to sick days, personal days, holidays, vacations and other off time digs deeply into small margin businesses like insurance brokerages, CFAs and other service providers.
Outsourcing delivers a roster of benefits:
- You only pay for work performed.
- You pay less because some of this work is outsourced to economies in which $20 is a day’s wage, and a good day’s wage at that.
- You only pay for services you actually need. This requires an analysis of your current business model to identify business activities that can be outsourced and, just as importantly, those business activities that should remain “in house.”
During your analysis, keep in mind the needs of your client base. For example…
… if your company bills the client base monthly for services rendered, accurate, reliable accounting and billing services are a critical part of your business model. Conversely, if you only invoice clients annually, or when services are rendered, perhaps this routine chore can be outsourced to a bookkeeping service in Mumbai.
Look Locally First
However, when outsourcing, look locally first. There are many locals who are outsources, and often, these individuals are highly-motivated, work-at-home parents or part-timers who can lower your business’ operating costs. Local outsources understand the culture and the nuances of language that an off-shore outsource might miss.
Don’t Outsource Critical Business Functions
I wouldn’t recommend outsourcing legal services for even the most mundane question regarding a contract, risk exposure or other matters that can negatively impact your business.
I’ll pay the extra for a legal professional’s knowledge of the law. Same with key decision makers within my organization. Indeed, you can outsource marketing but if marketing delivers company profits, it’s a valuable in-house asset – even at the higher cost of maintaining a marketing professional on staff. I’d counsel against cutting costs while risking a mature local brand and expanding the company client base on excellent client retention. That’s a business function I want to keep close to home.
Avoid Outsourcing Customer or Client Contacts
If your bookkeeping needs are simple, outsource. This is a back office function. It’s routine. And it doesn’t have any interaction with clients or customers.
I recommend keeping humans on staff to take calls. An automated call capture system that requires an endless number of keypad entries is not what your clients or customers want. They want to talk to a human who can provide answers, take an order, check on an order status or direct the caller to the right person in the organization to solve the caller’s problem or answer his or her question.
Client care is an essential element of building a stable client base and, that’s the key to long-term business success. I always advise client-friends to consider “a human on the line” as an investment – one that pays handsome dividends. Quality care keeps clients in place and you want complete, immediate oversight of your client care needs and solutions.
Avoid Outsourcing Work That Requires An Understanding of Local Culture
If your business maintains a website (and it should) you’ve probably heard that informational content is important to getting search engine recognition.
Some business owners outsource website content writing off shore, and writing by a non-native English speaker can have humorous to disastrous results. If you outsource blog posts to a low-cost company in the Philippines, to a content mill that produces one-page articles for $1.00 apiece, well, you get what you pay for.
Your website should sound like you, and appeal to the needs and desires of your target demographic, be it local, regional or national. Content written by ESL copy writers always sounds just a bit off. Not a criticism. Simply a lack of understanding of what motivates your target audience.
So Which Jobs SHOULD You Outsource?
A US-based company wanted another outlet for their high-end product and vending kiosks were considered. The company hired a researcher who compiled reams of data, metrics, articles and other informational content on the who, what, where, when, why and why not of marketing via vending kiosks.
For less than $150, the company had all the metrics and opinions it needed to determine whether kiosks were in the company’s future. (They weren’t, BTW.) So research is one activity that can be outsourced with positive outcomes at very reasonable prices.
Data entry, lead generation, market research, data harvesting, search engine optimization for the company website, marketing collaterals development and special projects can all be outsourced safely without risking your company’s hard-earned reputation for quality and, simultaneously, expanding margins and increasing productivity.
General rules of thumb for using outsources:
1. If it involves client engagement, keep the activity in house under your supervision. Client retention software is available. Buy a program, track orders, business commitments, client birthdays and other data that create happy buyers, and an ever-expanding client base.
2. If it involves critical business functions, like billing, order capture or basic client care, keep the activity within your offices. Use internal assets and trusted advisors to provide counsel on marketing, web development, legal questions and contract review, accounts payable, receivables and other functions that play a critical role in long-term business success.
Too many small business owners take a short-sighted view and simply look at immediate cost savings. A longer-term view demonstrates a good return on the investment in staff under your management.
3. One-time projects – information research, market research, web design and optimization, a far-distant trade show – can all be outsourced. Once the job is done to your satisfaction, you pay the outsource a small fee while your expensive, in-house staff engages in more profitable, productive activities.
4. Outsourced, routine, back office activity is the sweet spot for targeting the most cost-efficient uses of out-of-office providers. If your in-house staff is shuffling paper, or entering customer orders, you’re wasting precious operating capital.
Outsourcing these activities is simple and, by shopping your outsourcing needs locally, you have an instant rapport with the service provider. Hire local outsources, save money and ensure that your for-hire assets understand local culture and what your buyers want in using your business.
Examine your business activities – lead generation, order capture, client care, records-keeping – make a long list. Cross off any activity in which your company comes into contact with clients by telephone, e-mail, instant messaging or any other means. Client care is essential to long-term business growth.
When outsourcing is done smartly, it grows your bottom line faster than you ever imagined. Outsourcing is a powerful business trend and it’s a powerful business tool.
Use it wisely.
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