Startups are always faced with the decision to outsource or not. I remember the morning a call came through the house line; it was long before cell phones and an eternity before Android or iPhones. My mum was late for work, so she picked the call on speaker as she combed her hair to the side. After an exchange of good mornings, a sultry female voice casually informed her that she was my dad’s mistress. My mum in turn casually inquired when the mistress was getting an upgrade to wife, as there was much to be done on the home front. My aunt Rita, who by the way assumed she was pranking my mum, could not believe my mother’s reaction! She spoke about it for weeks and told anyone that cared to listen that my mum was probably half off her rocker!
But serious or not, my mother was not kidding about having much to manage on the home front! She had her hands so full on some days that any form of help at all might have been welcomed!
Let’s face it, as small startups we too are married to our businesses and there’s a growing list of things we’d sooner farm out – there’s laundry, kitchen duties, shopping, dropping off the kids, settling disputes between toddlers, packing school bags, homework, broken crayons, costume planning, ironing, organizing everyone’s wardrobe, etc.
Like the humans who run them, small business startups can burn out if its owners try to manage everything that concerns the business, especially areas that are not the core competence of those entrepreneurs! It is businesses like these that require the other woman; sometimes other women! In business terms, they need to outsource!
What Outsource Is Not
If you’re the typical young business owner and you’ve ever sat in a room with a loan officer (you know the annoyingly calm person in the well-tailored black suit who is, most likely, standing between you and the SME loan that is supposed to take your business to the next level), you’ll have realized and wondered why you are your own administrative staff, head of marketing and sales, why you constitute your entire purchasing department and also human resource department.
And while you were wondering this, you suddenly realize that this loan officer reminiscent of Will Smith in Men in Black II (yes I took it very personal) also expects you to be your own accountant and finance department. How many things are you supposed to handle for crying out loud?
A January 2010 article on the Forbes website quotes Peter Drucker as saying “Do what you do best and outsource the rest.” This would mean handling as many things as is required without compromising the perceived efficiency of your brand or service while outsourcing the rest to people whose area of competence it is to be excellent at that service.
But note that while outsourcing might seem like the new age and sometimes virtual (as is found in developing countries) way to delegate duties that might be difficult or otherwise capital intensive, outsourcing is not something you do just because you hate a particular chore nor is it a loss of control or exclusion from the business process that is being outsourced.
Outsourcing in the case of small businesses also need not be to a company but to a professional who is flexible and reliable and can provide the service you require.
Not Too Small To Outsource
One big fear business start-ups have is that they are too small to outsource. This might or might not be true. This is one area where size does not matter as much as the particular need of the business. For instance, a business that is still at the ledger stage of its operations, where a two-column balance sheet can take in all its financial information, might not require the outsourcing of its accounting and financial processes.
However, the same small business might find itself needing to let out more and more cash in pursuit of bigger purchase orders, tighter deadlines, increased manpower, etc. In a situation like this, there is the option of hiring an accountant or chief financial officer and putting them on your payroll.
There’s also the other option of sitting up at night and trying to learn the use of accounting software or pouring over records. I dare say these two may prove too expensive or tedious, but what if outsourcing were an option, you could find someone with this competence and have her or him come in every other week and pay per book balance or task.
Let’s do the math. As a small start-up you might not be able to afford to pay a competent CFO a monthly figure of N750, 000 (seven hundred and fifty thousand naira monthly), but if the need for one arises, you could have someone who comes in at intervals for a fixed fee, say, every other Friday, for N30,000 – N50, 000 a session. That brings you to N60,000 – N100,000 monthly.
What To Outsource
As your business grows and needs and tasks increase, it might be tempting to want to outsource anything that threatens to take away your attention from the business. But here’s how to identify what goes out and what ultimately stays in.
Tasks where a high level of expertise is required
Some tasks like financial, legal, or computerized functions require a high level of skill. If these have nothing to do with your core process of output and will cut down on the overhead cost or improve efficiency of output time, then outsource them.
Infrequent tasks that require specialized skills
Increased competition might introduce us to needs that don’t necessarily require hiring permanent staff but might require constant follow up or upgrade. “When I found myself needing constant graphics and digital media services, the best thing was to find someone who could handle all I needed on demand for a fraction of what it would have cost to employ staff, buy computers and increase Wi-Fi and bandwidth,” says Ebere Ndubisi, CEO of Simply Decadent, a confectionery startup.
In large firms where a customer relation center is needed, customer service call centers are given out to agencies that handle everything from recruiting to actually running the centers. In smaller businesses, repetitive tasks could refer to things like delivery. If you have added a home delivery service to your business, you might find the cost of buying 2 to 3 rickshaws, motorbikes or buses, fueling, maintenance, employing delivery men, and going through the motion of training and trusting them, a little too cumbersome. But you can have all of these by latching on to sites like Jumia, Konga, etc. that have this as their core area of competence.
Not only does this offer a cheaper and better-trusted alternative, you actually get noticed through exposure to a database of customers and get into market competition with the bigger players who also use these platforms.
The best outsource opportunities still give you access to and control of the process. The output of the service (outsourced) should never be in conflict with the brand integrity of your business startup. For instance, if you have built or are building a brand on integrity and prompt response, it is crucial you pick a delivery service that is trusted for its promptness. This is what I’d like to refer to as the rule of shared value!
This rule of shared value extends to individual outsourcing as well. However, it is harder to find people you might readily trust with a process. The key here is to ask people in your network, small startups who use the same service you are seeking. That way your outsource personnel come with a referral and a track record!
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