Automate or Outsource?
Posted: Wednesday, September 15, 2010
by Bill Davis
I have been a small business owner for nearly 20 years, first starting out as a tax preparer, then a computer consultant to a freelance "Jack of All Trades." Now, I am working with individuals and small business owners to help them improve their businesses, increase revenues, cut costs, improve efficiency, and the like.
One thing any small business owner runs into at some point is getting mired in the details and losing sight of the ultimate goal: Growing your business.
If you choose stagnate, there isn't a whole lot to talk about . We can work on improving efficiency and effectiveness, but what's the point?
However, if you choose to grow, you are really faced with one conundrum: How to get more done in any given day. That boils down to making another choice: Do I hire somebody or make my existing processes more streamlined?
The first one can be tackled from 2 fronts: Either put somebody on the permanent payroll or outsource projects. Both methods have benefits as well as drawbacks.
Hiring somebody allows you to train them well and mold them in your likeness. You can begin small and give more responsibility as he improves. You have to be careful though. Do not hire somebody to handle your core competency. For example, if you are good at providing customer service, by all means do not give that responsibility to your employee (same goes for an outsourced worker). Instead, give them administrative tasks that you can train them to do and follow up with them to ensure that they have satisfactorily completed the tasks involved.
Of course, if you hire somebody, whether permanently or temporarily, you have committed to a higher fixed cost structure as well as potential for errors that could cost money if severe enough.
You also open yourself up to all sorts of government red tape, including payroll taxes, disability and unemployment insurance costs, and health care coverage.
Automating your current business processes offers several distinct advantages to hiring. First off, you usually pay once for the improvement and then reap recurring benefits every time you repeat the process. A side benefit to process improvement work is that you really learn your business and put a lot of thought into how the customer experience is affected by nearly everything you do.
That's a GREAT thing!
Finally, running a very efficient operation enables you to focus on the actual strategic and tactical elements of your business. For example, if you run a fitness bootcamp, you could focus on generating more business rather than spending more time than necessary doing the "backend office" administration.
Think of it this way: If it does not directly generate revenue, it is a cost, either in actual dollars or in opportunities lost. Think of how many customers you could contact in the span of the hour it takes you to enter the days receipts in a journal. Streamlining and automating is the key.
Sure, it may cost more at the outset, but generally speaking, those improvements pay for themselves over time. Sometimes in an extraordinarily short time.
The other incredible benefit that automation and general business process improvement brings to the table is that once done, any remaining work can be handed off to an outsourced or temporary employee.
One example of this from the online marketing world is that of driving targeted traffic to your website. Any good traffic-building strategy contains several key components, such as building backlinks, creating content, and participating in social media marketing. Any one of those elements could be a full-time job if done manually.
The trick is to leverage potential assets you have to squeeze as much return on investment as possible. You could hire somebody to build backlinks, hire somebody else to write articles, and outsource a social media manager.
Or you could use an automation tool to do it all (or buy a few tools that accomplish the objectives). Once you have ironed out your process, you could then hire out somebody for a relatively small fee to run it on a periodic basis.
As you can see, there are legitimate reasons for employing each method. The important thing to remember is you don't have to make an "either-or" choice: You really can use a combination of several methods to achieve your goal.
For more awesome business development tips, check out Bill's work at Internet Marketing Muscle.
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Top-level comments on this article: (4 total)Interesting article with lots of good tips for someone who wants to streamline their business.Please log in to respond to this comment.Thanks, Linda! The cool thing is that progress is very easy to attain. Incremental change is all that is needed :)Please log in to respond to this comment.
Its a good article and very informative.Please log in to respond to this comment.Thank you, Chiradeep!Please log in to respond to this comment.
A lot of helpful hints here Bill, thanks for sharingPlease log in to respond to this comment.Thank you for the kind words, David!Please log in to respond to this comment.
It was so strange, Bill, a few seconds before your article came up, a thought flashed through my mind that in a certain area of my life I'm stagnating! How's that for serendipity! Thanks for your article.Please log in to respond to this comment.Jennifer, thanks! Everything is connected :)Please log in to respond to this comment.
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