Small business outsourcing: How do you do it?

Today I’m attempting to answer a question from Julia Odgers of KidsTravel2. Julia asks: “It would be useful to know the first best things to look at outsourcing when you are in a growth stage as a young business. I know it will depend on your own skillset but I find it hard to balance growth with the expense of facilitating that growth.”

It’s really important to give some thought to outsourcing if you’re running a small business.

Even more so if you’re running a  business part-time, as many of us are.

It’s tempting to save money and do everything yourself, but this will seriously limit your progress. In fact you might not ever get your business started! There are so many skills you need – copywriting, marketing, PR, bookkeeping, web design, graphic design, customer service to name a few – that it could take you years to learn them all to even a basic level.

Even then, someone who does that type of work all day, every day, could do your piece of work in a fraction of the time it would take you to struggle through it yourself. Once you add in the hours of your own time, outsourcing could be far cheaper, too.

Another snag with the DIY approach is that you can pay yourself too little. That means that if you try to outsource later on, you can’t find anyone to work at such a low rate. Either you have to raise your prices and risk losing all your customers or struggle along doing everything yourself.

I’ve been researching a few new projects this summer and these days I no longer take a ‘I’ll do it all myself and think about outsourcing later’ approach. I’m factoring outsourcing into my plan right from the beginning. That way I can get my prices right from day one, instead of having to raise them later, plus I’m spending my time on what I’m good at.

I don’t have much experience in outsourcing as a small business owner so I asked around some of my contacts to see if I could find a guest poster who does. I couldn’t find anyone! (If you know of an outsourcing expert who’d like to guest post, please do let me know…).

I do know something about outsourcing because I worked for a big outsourcing company in my LBK (life before kids). So I’m going to apply what I know about big company outsourcing to a one-(wo)man business.

So here’s how I’d approach outsourcing:

1. Work out where I’m spending my time

I’d write a list of all the job roles I have in my business e.g. bookkeeper, customer service, data entry, dispatch/fulfillment. I’d make sure I separated out jobs in the same area but at different levels e.g. a marketing director would be responsible for the strategy but a marketing assistant would be sending out press releases – different level of skill and different salary! You can include jobs like childcare, cooking and cleaning if you like, too.

If you’d like to know more about this approach, take a look at The E-Myth Revisited by Michael Gerber

2. Rate each job

Next to each job I’d write down how many hours a month I spend on it.

Then I’d rate each job high, medium or low for each of the following:

Skill factor: Do I have the skills to do this job quickly and efficiently? Or am I struggling through because I think it’s saving me money? (High skills, medium skills, low skills)

Hassle factor: Do I dread this job? Does it interrupt the flow of my other work? Or is does slip easily between my other tasks? (High hassle, medium hassle, low hassle)

Enjoyment factor: Do I enjoy this job? Do actually I want to do it, or would I cheerfully hand it over to someone else? (High enjoyment, medium enjoyment, low enjoyment)

3. Cost each job

Next, I’d put a rough value-per-hour on each job.

As a rough guide you’re looking at up to £25 per hour for a virtual assistant or bookkeeper and £100 per hour upwards for professional jobs like marketing consultants, accountants and lawyers. Other jobs you could include might be childcare, cleaning or casual work by local teenagers, like post office runs.

It could be interesting to work out how much you should be paying yourself for all the different jobs you do in your business!

4. Decide which jobs can be outsourced

Look for jobs with a high hassle, low skill and low enjoyment rating. If they are also the jobs with a low value-per-hour, then those would be the first I’d outsource.

The jobs you outsource should either a) save you money or b) be tasks you can’t do yourself because you don’t have the skills or qualifications (e.g. prepare annual accounts for a limited company).

Finally, here are some resources that you might like to check out:

  • First, my own post about outsourcing when you can’t afford to.
  • Still think you can’t afford to outsource? Try Fiverr, where you can get jobs done for just $5. If you’re stuck for ideas, try this post: 7 cool ways to use Fiverr.
  • Nicole Dean, an internet marketing hero of mine has a year-long course on outsourcing for online businesses called Outsource Weekly. I haven’t tried it myself, but I’ve bought several of Nicole’s products now and they’ve all been excellent. If you’d like a flavour – and some useful outsourcing tips – you can read a short report on outsourcing by clicking this link: Outsourcing: Yay or Nay?
  • The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich by Tim Ferris. This book divides opinion between those people who think the whole idea is a bit silly to others who believe it to be the lifestyle business bible. Whatever you think of the basic premise of the book, it does have some very practical outsourcing advice.
  • If you’re thinking of using a fulfilment company (outsourcing your picking, packing and dispatching) take a look at Fulfilment By Amazon (you don’t have to sell on Amazon, it could be from your own website).

If you have any more advice on outsourcing or you’d like to guest post, please leave me a comment…

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Creative Commons License photo credit: Randy Kashka

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Comments

  1. Thanks Helen – really appreciate the time you have spent looking at this. Great advice as usual. Strangely enough at my last session with my Business Link advisor we were discussing this and he also recommended The E-Myth Revisited by Michael Gerber. I bought it, have read it and feel very inspired and fired up so would definately recommend it to others too.

  2. PS – meant to add I have successfully outsourced warehousing and fulfilment and am happy to share my findings if anyone else is at that stage and not sure how to progress

    • Thanks Julia! The E-Myth really is a popular book, I see it mentioned all over the place. Thanks for the feedback and also for the offer of sharing your findings on outsourcing warehousing and fulfilment. That experience would be invaluable to anyone who is ready to take that leap, so I’ll definitely keep you in mind!

  3. Helen, I guess I have to agree with you that outsourcing can free up your time so you can use it to grow your business instead. I think that what’s important for the success of your outsourced project is to have these 3 Elements: Trust, Collaboration and Communication. What do you think of outsourcing tasks to freelancers in online marketplaces, where you get rates as low as a dollar an hour? Yes, it sounds surreal.. but it’s real. I just believe in paying for quality work though and when the rate sounds too good to be true, it probably is.

    • Thanks for your comment, Shaleen. I agree, you usually do get what you pay for. But there are a few situations where a lower fee doesn’t necessarily mean poorer quality work. One is where the freelancer is living in a location where the cost of living is lower than in the West such as India or the Philippines. I used to work for a large outsourcing company. I worked closely with the Indian team and I actually travelled to the Mumbai office. The employees there were some of the most capable, qualified and efficient people I’ve ever worked with, which is why I would never discount any worker simply because they live in a different economy than my own. Another is where a freelancer is just getting started and building a portfolio. I know several mums who are qualified and experienced administrators but are new to freelancing and are using Elance and People Per hour as a way of getting started. Having said that, I think you need to investigate the freelancer thoroughly before you hire them and, where possible, aim to be building a strong virtual team for the future (which is where the trust, collaboration and communication come in). This of course means you may have to pay more per hour in the long run, but it’s likely to be worth it.

      Having said all that, I respect those freelancers who refuse to advertise on these sites because the going rate is too low. The rate IS too low for a skilled, experienced professional living in the west.

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