Key Outsourcing Tips for Small Businesses

BASED ON LONG EXPERIENCE IN THE MARINE INDUSTRY, THESE TIPS APPLY EQUALLY TO ALL SMALL BUSINESSES…

I think it's fair to say that the recreational marine industry has entered a period of “cautious optimism”. Perhaps the business sector in which you work has as well. If so, in anticipation of a further recovering market, you may be contemplating one or more operational or business projects ― for instance, to improve cost-efficiency, or add services to your menu, or attain increased market share.

At the same time, given your experience with the economic vagaries of the past six or so years, you may be understandably reluctant to add recurring and ongoing payroll expense. And this may be delaying your initiation of potentially critical improvements to, or expansion of your business. If this rings a bell, I’d like to share with you some hard-won conclusions concerning how to meet strategic expansion and improvement needs in a recovering market by means of cost-effective outsourcing.

Understand clearly the general advantages and disadvantages of outsourcing...

Let's be very realistic: outsourcing does not necessarily cost less than handling work in-house. At least, not insofar as concerns direct expenses. Outsourcing does avoid contributions to payroll taxes, as well as to employee benefits. But when it comes to dollar savings alone, by far the major economy to be realized by outsourcing is the avoidance of adding to ongoing payroll that stands a good chance of continuing well past the completion of the specific projects in question.

Outsourcing also enables you to take advantage of very specialized experience and skills that might otherwise not be supportable in a small-business context. And outsourcing can be an effective palliative for passive resistance within the ranks to change-related projects.

Against that, there are several distinct disadvantages to outsourcing. First and foremost, outsourcing involves the loss of a significant measure of control. The employee who works for the outsource contractor is beholden primarily to his or her employer, and only secondarily to you. If you are unhappy with, or deem insufficient work by an outsource contractor's employee, your recourse is to the outsource contractor, and not necessarily to the employee, and is governed by the terms of your contract with the outsource contractor. With outsourced labor, you don't have the power to simply walk up, and tell someone his or her work sucks, and by the way, hit the road, bud.

Understand the specific small-business circumstances in which outsourcing works to best advantage...

In small-business environments, outsourcing works best for duration-defined projects that additionally have measurable outcomes.

For example, suppose you want to improve your costing and bidding procedures. If you're serious about this, you want to be able to implement such improved procedures within a given amount of time, say, three months. You want to reduce the pain of working up submissions to RFPs, and you want to improve your ability to monitor the progress of preparations for submitting bids and proposals. You see the goal of such improvements as being awarded an increased number of contracts. These can all be used as quantifiable metrics.

Don't end up behind the eight-ball: clearly define your goals and objectives before seeking to utilize outsourcing.

Do you want to initiate a project in process improvement? Are you looking at improving cost control? Or are you, perhaps, thinking about prototyping a new product? These are projects which whose parameters can be pretty well defined, and as such, are likely candidates for outsourcing to a team with specialized background and experience. Moreover, they are projects with clearly definable and measurable outputs.

But there are also projects that have less well-defined objectives and goals, such as improvements in customer relations or market profile. These latter kinds of projects require not only longer-term attention, but long-term commitment and follow-through. These parameters are inconsistent with the hit-hard-and-run type of help you may be looking to secure from outsourcing. Consequently, if you are, in fact, looking to fulfill a long-term need such as this, outsourcing may not be your best choice.

When it comes to outsources, nothing counts as much as successful prior experience...

Some would-be business gurus will counsel you to hire for talent and potential. But when you're outsourcing, you're not looking to develop someone else's potential; you're looking to reap the immediate benefits of their expertise and experience.

Do you remember the whimsical advice that, when you hire a lawyer or a surgeon, look for someone who stopped practicing a long time ago and started actually doing the work. Well, this play on words notwithstanding, one of the objectives of outsourcing is to gain the services of someone who can absolutely hit the ground running.

Always keep in mind that the advantage of outsourcing is that you only pay for the services you need, and only for as long as you need them. You outsource to avoid ongoing permanent payroll additions —and when you outsource, you never want to be paying while the outsource hones his or her skills, and figures out what he or she really needs, or wants to do, when they grow up.

Don't look for temp-to-perm conversion...

The best outsourced professionals are those who don'twant employment, and don't want to string out a project indefinitely. They are, if you will,hired guns — in for a period of time, get the job done, and move on. They are completely project oriented. And when the project is over, they're happy to be, indeed are most comfortable moving on.

The best outsourced professionals are never afraid to tell you what they think. Unlike those looking for long-term employment, they are never swayed by what they think you want to hear. That doesn't mean they're arrogant or stubborn or unresponsive to your views and needs. They're just 100% their own people, confident in their experience and skills. In other words, almost everything that makes them good outsources often gets in the way of their being good, long-term employees. So recognize the difference between outsourcing and recruiting for in-house staff. — Phil Friedman

Author's Notes:  If you found this article of value, you may want to take a look at some of my other writing about small business operations and management:

"Selling Bull Chips in a Bag"

"Tips for Successful Consulting"

"Maximizing Throughput on Fixed Assets and Overheads"

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About me, Phil Friedman:  With 30 some years background in the marine industry, I've worn numerous hats — as a yacht designer, boat builder, marine operations and business manager, marine industry consultant, marine marketing and communications specialist, yachting magazine writer and editor, yacht surveyor, and marine industry educator. I am also trained and experienced in interest-based negotiation and mediation. In a previous life, I taught logic and philosophy at university.

The (optional-to-read) pitch: As a professional writer, editor, university educator, and speaker, with more than 1,000 print and digital publications, I've recently launched an online program for enhancing your expository writing: learn2engage — With Confidence. My mission is to help writers and would-be writers improve the clarity of their thought and writing, master the logic of discussion, and deal confidently with criticism and disagreement.

To schedule an appointment for a free 1/2-hour consult email:   info@learn2engage.org. 

Text Copyright © 2016 by Phil Friedman — All Rights Reserved
Images Credits:  Phil Friedman, FreeDigitalPhotos.net, and Stuart Miles

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