Running a business requires a variety of skills and resources. As your business grows, entrepreneurs need to ask themselves which parts of their business they should outsource, and which elements should be kept in-house. There is no set answer this. The answer will depend on your in-house skill sets and owned resources, and change based on your specific circumstances at the time.
Understand your business in detail
Before you can decide which aspects to outsource, it’s important to understand each element of your business. The best way to do to this is to put it all down on black and white. Write the different processes of your business down and detail what each process needs to be able to be completed successfully. Start with your customer and the delivery of your product or service, and work backwards towards the beginning. Understand which processes lead to customer value and what resources (human and otherwise) are needed at each step.
Choosing what to outsource
Once you have a detailed understanding of what your business has and what it needs, it is easier to decide what should be outsourced. Clive Butkow, an experienced venture capitalist, advises that the answer to this question depends on your priorities, abilities and resources. He suggests that you consider a few key questions when deciding what to outsource:
1. Which processes can be outsourced?
This requires a detailed understanding of which aspects of your business are critical. Ordinarily it would be wise to not outsource critical processes, however, if your skills or resources are limited in a critical area, outsourcing to a professional will make sure that that critical aspect is done properly. For instance, if your business requires complex and detailed contracting, it is probably better to outsource the drafting of the contracts to an experienced attorney than manage internally.
2. How will outsourcing affect my company both positively and negatively?
To become more outsource-savvy, it’s important to, not only understand the processes of your business and what they require but also understand and weigh up the advantages,disadvantages and risks or outsourcing a particular task. Again using the contracting example above, the advantage would be that the contracts would be drafted by a professional, but, naturally, that would be at a cost. What you need to decide is if the pros outweigh the cons.
3. How much more expensive it is to leave these processes in-house?
This requires a clear understanding of the opportunity cost of performing actions internally that are either not core to customer value or present material risk if not outsourced. Entrepreneurs often struggle to measure the value of their time, as they often do not earn market-related income. Even though you may save on the cost of outsourcing, the business may lose by not having you focus on growing and building the business. Remember that the cost of loss may not always be monetary – your time is just as important.
Your business’ finances is definitely a critical part of your business, it’s effectively the force that keeps your business going,and having your finances managed and planned for properly makes all the difference for the future and longevity of your business.
Are you considering outsourcing your business’financial processes? Contact usto handle that for you so you can focus on what you do best.