At some point in time you’re going to want to get an extra pair of hands in your business. You sure as heck can’t do it all, and sometimes it doesn’t make sense to employ people directly. You just want the work done with the least fuss possible and with great results.
Unfortunately, results from outsourcing work can vary considerably and are not only costly, but can lead to a damaged reputation with your customers and a lot of work picking up the pieces.
Today I’d like to share with you seven common mistakes small business owners make when outsourcing.
Outsourcing vs Project Work
Outsourcing is different from project work. Having someone develop your website is a project. There’s a distinct beginning, middle and end.
Having someone manage your website is different. This might include having someone keep track of the SEO, keep track of the Pay Per Click, keeping everything updated, watching the metrics and adding new content. This is outsourcing.
The great news is that the tips I’m going to share with you today will help for both outsourcing and project work. It is however important to still know the difference because one represents an investment at a particular time, while the other means ongoing use of external suppliers, month on month, year on year.
1. Ignoring Outsourcing
If you were able to focus your time on what made your company money instead of the non-core business activities, what would that do for your company? If you didn’t have to worry about email management, social and domestic tasks, bookkeeping, data entry, supply chain management, order fulfilment, transcribing audio and content editing, how much time would it save you?
Many companies simply overlook outsourcing as a solution to overwhelm and internal capability. Many others assume it beyond their price reach and don’t investigate the possibilities.
You need to have a clear picture of what you want to achieve. Outsourcing is taking your non-core business processes (bookkeeping, telephone answering, etc.) and having them done by a trusted third party. This gives you the flexibility to move and adjust more quickly and more efficiently to the constant changes of your business or service area. How can outsourcing help you and your business?
2. Outsourcing When You Can Automate
Let’s say you need to pay your office rent or your phone bill every month. You find it an annoying task and keep forgetting, resulting in several late payment fees. Would you hire someone to come to your office, open and sift your mail, write a check and then post it?
Of course not. You’d sign up to some form of automatic electronic payment service.
Why pay for things that can be done automatically? Things that can be automated include:
- Paying someone to sort through spam comments on your blog
- Paying someone to approve your Twitter followers
- Paying someone to send out repeat invoices
- Paying someone to respond to opt ins on your website
- Paying someone to send out campaign emails, newsletters or postcards
- And lots more.
3. Outsourcing the Wrong Things
When outsourcing high touch activities – those that require a lot of attention – it helps to put them into broad groups.
Outsourcing the wrong activities can lead to disastrous consequences. Your decision on what to outsource should consider how effective you and your team are at performing the activity as well as how important it is to the business. This assumes of course that the low business value activities you’re doing can’t be eliminated altogether.
If you listen to everyone about what you should be doing in your business you can end up with some costly mistakes.
A previous client of mine invested what was for her, a great deal of money on internet marketing. After 18-months of SEO and social media she had nothing to show. The problem? Her website didn’t engage her audience and nor did it have a clear path for readers to be taken onto the next stage of her marketing funnel.
What might have been an effective marketing strategy turned into a drain on her cash. She had started out too soon and wasn’t in position to leverage the value.
4. Hiring the Wrong People
It’s very common for business owners to reach out to those in their immediate network without doing their due diligence.
Being within your local network group doesn’t qualify them as being the right people to help you. Sure, they might seem nice, but check them out anyway. Look to see who else they’ve worked with and speak to those people directly about their experience with your intended supplier. Don’t rely on written testimonials.
Avoid using friends and family, particularly if they might end up distracted by developing things of their own. The best teams are dedicated to providing services for their clients and already have a number of happy clients. You’ll also find it harder tackling issues that crop up if things don’t go as well as you might have liked.
5. Lack of Preparation
Using outsourcing as a quick fix to remedy certain problems is another commonly encountered issue that leads to poor results. Often, small business owners start obtaining proposals and negotiating contracts with suppliers before they’ve properly evaluated their decision to do so and what that might mean to others affected.
For the outsourcing agreement to be successful and lasting, you must prepare your team for the change during the transformation.
Issues such as job loss and resistance to change will crop up during the transition and need to be guarded against. Involve your existing staff as much as possible and keep them informed as much as possible.
6. Not Protecting Your Intellectual Property
The dangers of not protecting your intellectual property (IP) are multiplied when outsourcing. Are you using all three types of IP protection – physical, electronic and legal?
Steve Mezak, CEO of Accelerance advises that you should make sure your supplier “has a secure facility and uses computers without removable media to reduce the risk of unauthorised access to your IP. Use firewalls, VPN and encryption to protect your IP when in transit over the Internet.”
Proper legal protection includes written agreements and NDAs (Non-Disclosure Agreements). A clearly stated contract helps avoid disagreements later and keeps you from the expense of litigation.
7. Outsourcing What You Can’t Manage
I’ve saved what I believe to be the biggest mistake in outsourcing to the end.
Never outsource something unless you can manage it. You need to be able to understand whatever the function is that you want to outsource enough so you can manage it.
There may be some areas that you have extensive knowledge of and want it done in a particular way. Perhaps you found that doing something in a particular way has been really effective and you want to hand over that process to someone else. That’s fine and easy to see if something is working or not.
There might however be an area that you don’t have much knowledge in and you can’t actually perform a task very well. You need to know enough to find the right provider for you. You don’t want to be giving pieces of your operation across to someone without understanding it yourself. There’s too high a risk involved in doing this.
You need to know enough to be able to tell if your supplier is doing a good job or not. So do your homework first and make sure you put in place a service level agreement or get some kind of quality of service written into the contract. You can use that as your measure on whether you’re getting a good return on your investment.
You need to know enough to be able to tell whether your supplier is doing a good job or not so that you can either address and correct the issue, or get another provider.
This is a relatively small list of things that can go wrong. I’d love to hear about your experiences. What advice would you give others about do’s and don’ts for outsourcing?
To your huge success,