What should I outsource?

Answer these three key questions

Outsourcing may seem like a good thing on paper. It reduces labor costs, expedites turnaround time, etc. But where does it fit into your business?

It’s important to understand, structurally, how outsourcing can impact your workflow at each step of a process.

To get a better understanding of where outsourcing could benefit your business, ask yourself these three questions.

1. How to identify the key value?

According to a 2016 financial report by Sageworks, accounting firms have a net profit margin at 18.3%. Is your firm on par? If not what can you do to get there? If you are, there is always room for improvement.

There are three areas that always influence the profitability outcome of your business: People, processes, and tools. Reviewing, improving, and making sure you have the right solution in place is critical.

I was at a firm last week in Northern Virginia that had senior accountants doing merges of multiple data entry files and reconciling them. They were spending $100/hr to do menial data entry instead of increasing margins in conversations with clients.

Or how about a sales team I ran into in Phoenix. I asked them “You do not want someone who can consistently drive revenue tasked with making daily sales entries, do you?”

How do you find these opportunities? The key is to take the time from the needy issues you are constantly faced with and look at and prioritize the valuable over the urgent. When you do this, you begin to see what you don’t need to do at your business: daily sales entries, data entry, payroll journals, expense entries, receipts, credit card review, account reconciliations, and the list goes on

2. Is it part of the core business?

Another question to ask about your work is what is core and what is not. What work do you do that if you did not do it directly would be detrimental your business?

This goes into the idea of a niche. Refine the focus of your company to perform highly specialized tasks where you excel and nothing else. Software developers don’t need to be accountants and vice versa. Using someone else’s strengths are likely more efficient and cost-effective.

3. Can it be done remotely?

Some tasks need to be done in person, whether that’s face-to-face interactions or access to specialized equipment. If you don’t need a physical body onsite to complete a task, consider outsourcing it

Remote teams offer access to larger talent pools; regionally, nationally, and internationally. In our extremely tight talent market, remote team members can offer a higher level of skill at a fraction of the cost of an on-site employee.

So what is worth outsourcing?

When asking “what is worth outsourcing?”, think instead of “where is my highest profit margin?” While there’s no defined list of tasks to outsource, making the judgment call in each area of your business will increase profit margin and reduce scaling risk. Improve your business’ focus and cut costs by outsourcing.

The bottom line is, well, the bottom line. Your business should improve your revenues and margins. Outsourcing is one of the key business solutions that utilizes people, processes, and tools the most effectively and with the greatest value outcome.

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