When Should You Outsource?

Small business owners and entrepreneurs often wear a variety of hats - sometimes so many that no hat rack could ever hold them all. Your versatility, flexibility, and eagerness to take on any task are definite strengths, but those same traits can also hold you back.

If you're spending time on activities that aren't within your expertise, those tasks can cost you time, money, and a lot of frustration.

So when should you outsource?

1. When the Dollars Don't Make Sense
How much do you make an hour? Any task you can outsource for less puts money in your pocket. If you make $40/hour building websites, hire a writer for $20/hour to publish your monthly newsletter. Not only will you be able to focus on what you love to do - and generate more revenue in the process - you'll probably end up sending your clients a better newsletter.

As Elance buyer Tim Ferris notes in his book The 4-Hour Workweek, delegating a task for 50% of your hourly rate generates a 100% return on investment.

2. When You Need More Staff… But the Money Isn't There (Yet)
As your business grows you're likely to need more employees, but oftentimes your revenues won't grow quickly enough to make adding full-time staff feasible. Outsourcing is the perfect answer - you can utilize "part time" resources until you can afford to pay the salary and benefits for a full-time employee.

For example, administrative tasks can quickly overwhelm growing small businesses, so consider outsourcing data entry or bookkeeping. An outside resource, such as a virtual assistant, can save you time and money and could identify financial and tax opportunities you might otherwise have missed.

3. When You Want to Focus on Your Core Competencies
If you're an architect, should you be writing press releases? Should a lawyer be adding content to her website? Should the owner of an ad agency enter stacks of data into a cost-tracking spreadsheet?

Your core competencies set you apart as a business and as an individual. You started your company to do what you love… so outsource the tasks that don't fit your passions and your skills. If nothing else, almost everyone we talk to feels they need to spend more time focusing on sales, because generating new clients and sales is the lifeblood of any company. Any task you can outsource frees you to grow your business.

What do you do best? What activities are the top priorities for you and your company? Identify those critical tasks - and outsource the rest to experts in those fields. You'll get more done and you'll enjoy your work more, too.

4. When a Task Can Be Reduced to a Set of Rules, Formulas, or Steps
Automation is based on a simple premise: Identify a desired result and design a system to consistently deliver that result. Assembly lines work on that premise, and many jobs do, too - so if you can determine a set of rules or steps that should be taken, you can often outsource that function.

Say your company uses e-commerce. You ship hundreds of packages a week, and you get 30 e-mail complaints each week: some legitimate, most not, but all requiring a response. Instead of spending time wading through your inbox, outsource that function. Establish procedures for how your most common complaints should be handled, and your virtual assistant can quickly deal with each problem using the rules and guidelines you established. Any issue that falls outside the norm can be forwarded to you for special attention.

Here's the bottom line: If you can create a process or procedure, you can usually outsource the function.

5. When You Want to Say "Yes" - But You're Afraid To
Imagine you're in public relations. Your clients love your work and trust you completely. Great!

Then a long-term client asks you to design their website. And you don't know the first thing about web design.
No problem!

Instead of giving the work to someone else - and giving away the revenue, too - outsource it. You may not be able to design a website, but providers all over the world can, and will be delighted to take on the project.

Whenever a customer needs services outside your core competency, don't turn the work away. Find an expert to help you. You'll generate additional income and build stronger relationships with your clients.

6. When You Want Your Staff to Grow and Learn
"Wait a minute," we hear you saying, "How does my staff grow and learn if I'm outsourcing functions instead of keeping them in-house?"

While it might seem counter-intuitive, outsourcing exposes you and your staff to the techniques, approaches, and ideas of a diverse group of people. Good providers want you to succeed. A web designer may have an idea for an online tool you'd never consider. A design engineer could suggest modifications to your product to improve quality and cut costs. Outsourcing won't just help you get work done. Collaborating with experts in a variety of fields will broaden your team's skill sets and spark creativity and innovation.