7 Steps to Successful Outsourcing for Small Businesses

Outsourcing has become more and more common as a method for small businesses to better utilize their time in building a business, to add more skills and expertise into their business and to make efforts to “level the playing field” when competing in a price driven consumer environment. No longer is outsourcing the domain of large multinationals as the increasing connectivity and evolution of the world into a virtual border-less society brings us closer together with other countries and other businesses.

While there is also the thought that outsourcing is “selling our children’s future” to the lowest bidder, taking a long term view in preventing excessive closure of small business due to entrepreneur burnout and a loss of passion that stems from working excessive hours to try to do everything alone can actually increase the job opportunities for local workers.

First and foremost the entrepreneur who has invested their time and energy into building a business, in doing so and being empowered to become a successful business automatically removes themselves from the pool of potential future employees by default. If you are running a successful business you are not also looking for employment.

Second, if the business entrepreneur spends more time focusing on building a business instead of just “coping” they get to a stage where the core income generating activities become too much for a single person and, since they now have a business that has a much larger percentage of income generating time, they look to employ more staff to work on core activities and build the business further. Not everything is a candidate for outsourcing so this generates local jobs for the future.

But, for the benefits above, outsourcing can be an often poorly advised or executed activity that results in disappointment and either a direct cost to the business in terms of excess expenses, and indirect reputational cost or both.

Below I have compiled my 7 steps to successful outsourcing for small businesses to help you the small business owner get the most from your outsourcing activities and look at growing and employing more staff in the future.

1. Know your Business

It should go without saying but the one of the most important considerations before you even start to consider outsourcing any activity to a third party is for you to actually know your own business in intricate personal detail. This means knowing and identifying the activities that are core and central to your business, the activities that you love doing and those that take time away from your day without actually generating any income for your business. It has been stated that business owners spend approximately 80% of their working day on activities that generate no income so identifying and prioritizing those activities according to the impact on your business time and the ratio of time worked to income generated goes a long way towards creating a targeted list or potential activities to outsource.

A simple rule of thumb to use is to ask yourself the question: “Is my customer prepared to pay me extra for me to undertake this task instead of someone else?” If the customer is not willing to pay extra for you to do the task then it is probably a good candidate for outsourcing.

2. Stop looking for the cheapest option

Outsourcing has a long reputation for businesses looking to dramatically reduce their costs in exchange for a service, but take it too far and you start sacrificing value for cost until you are paying a very cheap price for virtually no value. Historical procurement practice should accept a large portion of the blame for this mentality. Procurement professionals were initially taught that their role was to secure a commodity at the cheapest possible price (end of story). And where they started to venture into the outsourcing / offshoring world they took these practices with them. The result was cost cutting, substitution and Modern Slavery where vendors sought to both meet the reduced prices and also retain their profit margin.

You can’t expect a high quality service for a minimum price. In essence all you are signing up for is substandard results from employees who are not sufficiently skilled to accept a higher paying job. Any employees that work under these conditions are either actively looking to improve their situation or are so disheartened with their work and life that they have zero care factor about your company, service or products.

This is not the way to a successful outsourcing experience.

3. Have realistic expectations

This is not a reference to the available skills that can be reasonably engaged with outsourced staff but more about the time it takes for ANY employee to integrate into your business model.

There will be an induction and integration period, you are working with staff who have never worked with you before so both parties need to adjust.

For highly skilled outsourced staff this can be a relatively short process and may even seem to be completely seamless and invisible. However, for most employees, you will need a few days to really get to know each other and how to best utilize the strengths they currently possess and identify areas where they can improve to become invaluable to your business.

4. Document as much as possible

Realistically this applies to any business activity that needs to be performed more than once. Many small business owners will be running on mental processes and memory recall to undertake daily tasks. Without documentation you really do not have any business that is saleable or transferrable as it is completely dependent on your personal time to be able to operate.

Documentation may not be your strong suite, but it is a business necessity. Put simply “If you cannot articulate exactly what you want done, how can you expect someone else to do it for you?”

If you don’t have adequate documentation, look at hiring a more senior outsourced employee to help you on a more strategic level. This comes back to something that was eluded to in point 3, there is a wide pool of talent available to work as outsourced staff, if you need strategic staff to help you build a more sustainable business then look to engage strategic staff. Copywriters, process experts, analysts, marketing experts are just a few of the more specialized capabilities available, but in essence wherever you can identify a need there is an opportunity to find employees with that EXACT skill set.

5. Treat Outsourced Staff as you would Local Staff.

Irrespective of the location, you are still working with a real person who has a real life and real hopes and dreams for the future. Remember back to a time when you worked for someone else. What motivated you and what killed your enthusiasm.

If you have ever worked in a role where you were treated as nothing more than a disposable resource and given the phrase “ There are XX people waiting for a job like yours, I could fire you today and have someone else here tomorrow morning” you will know that being treated as a resource gives you zero motivation in your role. Unfortunately many outsourced employees have known little more than a life of being subjected to the exact management mentality shown above.

But imagine having a job where your boss cares about you personally and how you are , what challenges you are having and also lends their personal support when things are tough or if you want to become someone better. That is what inspires employees to go the extra mile for their company. Feeling valued and important can create employees who are substantial assets for your company.

6. Remember to help combat isolation

Many offshore employees have traded a corporate life for a freelancer lifestyle due to improved benefits, better (potential) earnings and the opportunity to avoid the long commute in a highly populated city.

What is not often recognized is they have also traded a life where they have social interactions daily with co-workers for a life where they are often isolated in their own home office and working for an unseen boss in another country. There are many tools that, for efficiency purposes, allow you to send quick impersonal messages to offshore employees, however even though these are efficient, they can further contribute to the feeling of isolation.

Make a point of actively communicating with your employees. Be a real person and have a video call with your employees. Use Skype or Zoom to have a real interaction and make a point for it to be about connecting with your staff, not just a forensic analysis of what happened since the last call.

We decided that a big part of working with a disseminated workforce was ensuring that, even though employees were typically home office based and geographically isolated, they had a support network and received regular calls from a local office as well as encouraging clients to do the same and this has always prompted motivation and loyalty in our employees.

7. Know who is doing the work

Step 5 and 6 are impossible if you do not actually know the person undertaking your work. Ensure you find a way to work directly with your employees. If you engage an agency to manage and source reliable staff for your work, a key aspect of this function should be that you are able to actively communicate with the employee. This allows you to directly communicate tasks with the person who will be performing them, not to a third party who will (hopefully accurately) pass on the information to the employee.

There is always a potential for instructions to be misinterpreted and “lost in translation” but this is further amplified if they only means of communication is via a third party.

The only effective way to get the most out of your outsourcing relationship is to have the ability to discuss and resolve issues in “real time”

The above points are essential in guaranteeing success in any outsourced employee scenario and are integral to our business philosophy at Ethical Outsourcing.

Get in touch today if you want to discuss your Outsourcing requirements or explore how outsourcing can help to scale your business.