Your time is valuable and limited. Your dollars are scarce. Your expertise only goes so far. There comes a time when you have to make the leap and outsource some of the goods and services your company needs.
How do you decide when to do something internally and when to outsource it? Here’s my simple, proven mantra: better, cheaper, faster.Now apply the two-out-of-three rule. Whenever you need to decide if you should keep something in house, repeat the mantra to yourself and then answer yourself. If you find another entity that can provide what you need better and cheaper, better and faster or cheaper and faster, give serious consideration to outsourcing that product or service. If you find another entity can do all three elements of the mantra, outsourcing is a no-brainer.
You need all kinds of services and products to run a business: accounting, customer support, human resources, IT support, legal services, marketing support, office supplies and tax preparation, among others. You’ve probably never considered trying to take on some of those services. But you also might never have considered outsourcing some of them, either.
The No. 1 reason most business owners and managers don’t outsource things is the perceived cost. The next reasons include overconfidence, unwillingness to let go and misplaced vanity.
When you launched your business, you might have started the process on your own by registering the company name and owner information with the Colorado Secretary of State. Perhaps you filed for an employer identification number on your own. You might have applied for business, use and sales tax licenses yourself. Maybe you even filed your own quarterly tax forms with the state and federal governments. But as your business needs grew more complicated, you probably acquired the services of an accountant, benefits company, lawyer and payroll service. Perhaps you also joined an employer or professional association to gain access to quality providers of complex services.
Making the leap from self-sufficiency to relying on others is not something most business owners do willingly. But when you outsourced your first business need —perhaps your incorporation or taxes — to another firm, you did so because it met two or even three of the items of the mantra. It was better, cheaper or faster to have someone else handle it.
My first leap was to hire an accountant. I always handled my own taxes, but the amount of time it took grew out of control. Moreover, I constantly worried I’d make a mistake or miss a filing deadline and owe penalties and interest or go to jail. I decided a tax professional could meet two of the three things in what became my mantra: better and faster.
It wasn’t cheaper to pay someone to do what I’d been doing for years. But the additional productive time more than offset the monthly bills. My time could be used far better on training or writing projects. I made far more money than I paid my CPA for that block of time. Besides, I transferred a lot of risk to her. She makes the payments, files the forms and is enrolled to practice before the IRS. Quite a good return on my investment.
Think about the needed services you’ve been putting off. Maybe it’s a mass emailing to clients and prospects. Just the thought of composing a great marketing piece makes most people want to run screaming from the room. Yet, you really need to let people know you’re still open for business. Could you write a great email? Probably. Could you do it faster or better than an email marketing expert? Probably not. Cheaper? Yes, but not if the email or press release never gets written or you could be doing something more lucrative with your time.
Perhaps you’ve avoided hiring a delivery service for your office supplies or business materials. Sure, you or your staff could save money by going yourselves. But a service could do it better and faster and maybe save you money in the process. At a minimum, you’d free up valuable staff time for other pursuits.
What about when you need staff, but are leery of the associated costs, potential layoffs and overall liability? Apply my mantra and maybe the best option would be to use a staffing company rather than a direct hire.
The bottom line? Every time you’re faced with a task or acquisition that someone or something else could do for you, apply my mantra: better, cheaper, faster. Then you can make a logical choice.