One of the biggest questions in small business management is whether to do something yourself or hire someone to do it. I was recently reminded of this as I helped my father-in-law paint the interior of one of his rental units. I haven’t done any painting since my 20s, but back then I did more painting than most people think about. It paid for a lot of my college.
My father-in-law’s approach is to do everything possible without hiring someone else. It’s his way of saving money and he likes the work. You have probably read other people’s advice to put a value on your time and job out everything that someone else could do for less. I’m not sure that the decision is made that clearly. In your own business, how much are you willing to outsource and how much do you prefer to do yourself?
Small Business Management: Core Competency
One of the key decisions you have to make is what is core to your business. For all of our businesses this includes operations, marketing, and advertising. These functions, if not managed correctly, can derail your business in a matter of days. I didn’t start with this clearly defined. I had to test each functional area to learn what worked. I don’t know how many times I tried to outsource advertising only to become disappointed with the results. The key is to measure your performance before outsourcing and then compare the new vendor’s performance against your own.
Small Business Management: Outsource
You should also identify what you don’t need to do. For me, this includes payroll, bookkeeping, graphic design, and equipment maintenance among others. Payroll is a no-brainer; it’s nearly impossible to keep current with all applicable laws and regulations while running a business.
Hiring a bookkeeping service is one of the best business moves I’ve made. I love not having to reconcile monthly bank statements and it’s even better to receive a current profit and loss statement and balance sheet for each business within days of the month end. Our managers use this information immediately to take corrective action.
In our cleaning businesses, we see many other owners who like to repair their own vacuums. For them, they say that the work is easy and a nice break from the daily routine. For me, I hate the thought of being pulled away from focusing on keeping and gaining more customers. This is something that I’ve always outsourced.
Small Business Management: Measure
Whatever strategy you choose, you must measure results. If it weren’t for our years of data on sales, efficiency, and revenue we wouldn’t be able to compare our performance. Think about the systems that you have in place today – are they enough for tracking your own or your suppliers’ performance?
I tried for years to outsource our inbound sales to a call center. It just never worked out – inbound call traffic was recorded differently, sales leads were not followed up as diligently as I would have liked, and it was difficult to set up the customer relationship. The results were that our call volume dropped along with our close rate and the conversion to repeat customers.
When it comes to small business management, much can be outsourced. Let me know how you handle it now or intend to in the future.