As you go through the process of growing your small business, there will come a point where you will have to decide whether or not to take on additional full time or part time employees. On one hand, the added human input can help you scale up your operations. But on the other hand, taking on employees can be a very costly and time-consuming process. Plus there is always the risk that your new hires won’t end up working out.
One way to overcome this dilemma is to outsource some of your business’ operations to another individual or business. Doing this will allow you to expand while reducing the risk of a costly bad hire or even a good hire made at the wrong time.
But, outsourcing parts of your business comes with its own set of challenges. After all, who says that this outside entity will properly “get” your company and its unique culture. How well will they be able to relate to your customers, and how do you ensure that there is enough motivation on their end to do a good job?
Outsourcing can truly make or break a company depending on how it is approached. So before you outsource anything- especially those front-line positions, such as customer service and sales- make sure you consider the following five pitfalls:
Businesses don’t consider the scope of their needs. This is the very first, critical step to successfully outsourcing your business’ operations. Before you start the process of looking for an outside company to take over, you should figure out exactly what it is you need from them. Not only will this help to make your search process easier, but it will help you avoid some of the other pitfalls mentioned below.
Businesses don’t allocate enough money. You really do get what you pay for, so beware of prices that seem too good to be true. While many small businesses are working with tight budgets, price shouldn’t be your only consideration when hiring a service provider. If you discover a company that offers the same basic services yet they are charging much less, then it could be a indicative of the kind of work quality you can expect from them.
There is not enough due diligence. Don’t just fall for a company because they have a flashy-looking website. You need to dig into this company’s reputation as well as the amount of time they have been in business. You should also research customer reviews and seriously consider trying to contact previous clients to see how satisfied they were. During the research process, pay attention to any red flags that could signal potential problems or mis-representation. For example, if it takes a long time for you to speak to a real person when you try contacting the service provider or if customer representatives are unfriendly and not knowledgable, then it may be sign to take your business elsewhere.
Businesses forget about cultural fit. Just as you should hire people based on their cultural fit with your company, not just the skills and experiences listed on their resumes, the same is true for any business partnership- whether that partnership is contractual or a joint venture or a full, working partnership.
There is no system to monitor performance. Outsourcing vital operations is not a set-it-and-forget-it process. There needs to be a system in place to monitor and review the company’s performance as well as the ROI that the setup is supposed to be achieving. By doing this, you will be able to quickly spot problem areas and then decide whether or not the partnership is a good one. One of the biggest factors to successful outsourcing is knowing when to walk away from a bad setup.
In short, outsourcing business operations can be a very reasonable and profitable method for expanding a business- but only if it is approached in the right way. In order for such as setup to have the best chance of success, the company needs to consider it as an important investment. With a bit of time, effort, and money upfront, they have the best chances of watching that investment grow.