Is there a good case for using another company to do certain tasks for your business? If so, when should you think seriously about outsourcing? I hope to lay out a framework for this sort of decision or at the very least this consideration.
It is important to recognize that there are many more options for outsourcing than there were, even just a decade or so ago. Much of our economy and many talented individuals have turned to contracting, some as a lifestyle and others as a defense against layoffs and the like. Hence options abound for the small and mid-sized businesses that proliferate these days. As Dan Sullivan has advised – Ask Who, Not How.
First, a business owner should think about the tasks that are required to run a business. Divide those tasks into core and non-core processes. For example, if you run a bakery, your core tasks are recipe origination and baking. Non-core tasks might be considered as payroll, IT, and taxes. You will not want to give up any of the core tasks or services you provide to customers. This is where you will want to focus on becoming the very best in your market, and also where differentiation from your competition really matters.
Next, think about how much knowledge and experience is needed to perform a function effectively and efficiently. Why do homeowners hire plumbers? Generally, to make sure mistakes are kept to a minimum and the amount of time required to complete a repair is also kept to a minimum. Someone who has 100x iterations in fixing a slab leak (as well as the equipment needed) will produce far better results than someone who is fixing this problem for the first time, even with a YouTube video guiding the way.
Finally, consider if the function(s) requires you to hire another employee. Does the task represent a full-time job, or do you have an administrative person that is under-utilized? Do you have to hire someone with a specialized skill-set or give someone specialized training? And what happens if that person is sick or gets hit by the proverbial bus? Is cross-training going to be needed so you can sleep at night?
If you can work to get better at all the tasks and challenges that really impact your customers and delegate thru outsourcing some of the non-core/peripheral tasks to other firms with more experience and/or better tools, you will be ahead of the game known as growing your business.