Why Outsource? – PART 2
This article follows on from ‘Why you should consider outsourcing – PART 1’ which you can find here. It discusses how outsourcing can offer your business a low cost, low risk avenue for achieving scale and labour efficiencies.
Nobody makes their own toilet paper.
It’s cheap, it’s commoditised, it requires a multi-million dollar infrastructure investment to make it, and you have to sell tonnes of it to cover your costs. Why would you want to go to all that trouble when you can pick it up at the supermarket for a few cents a wipe. If someone told you that you should make it yourself to save a few bucks on the cost of a roll at the supermarket, you’d think they were nuts right?
Have a think about what services you or your business consumes.
Are they commoditised? Are you consuming your limited infrastructure (office/house space, IT equipment, phone lines etc.) to produce goods or services that someone else could do more cheaply, because they have a volume, skills or infrastructure advantage that you don’t. If it’s done on a computer, or requires a phone line there’s a very good chance that you can achieve efficiency savings just by outsourcing it.
I know of dozens of business owners and entrepreneurs that stubbornly make their own toilet paper. Here are a couple of examples:
- a mechanic that made his own website. Looks terrible, puts an unprofessional face on the business and doesn’t generate income (as any business site should)… but he did save a few bucks by making it himself… or so he thinks. He bills his customer’s around $70/hr for labour, but values his personal time at $0/hr? Can’t help but think that given his long work hours, it represents several evenings that would have been better spent with the kids!
- a medium sized manufacturer who has created their own labels and packaging. Looks pretty cheap, and they wonder why they have problems convincing customers to pay a premium for their goods;
- a plumber that runs his own web marketing campaign. Does a good job… but the grunt work could be more effectively done by someone else for pocket change. He could be free to bill more hours or spend his off time relaxing instead of working.
Consider:
- Why pay someone $50 to do something when it can be done faster and better for $5? Even $3?
- Why spend hours of your personal time and energy on a task that someone else can do cheaper and better than you, and requires only a fraction of your attention?
If your business is profitable, you have even more reason to consider outsourcing. Once you’ve started to make money, it’s time to stop valuing your time at $0, and start focussing on the essential activities that only you can do. How can you better spend your time to make more money, help more people, or have more spare time (or whatever your particular goal is). Chances are you have better things to do then spend 4 hours on something you aren’t skilled at, aren’t paid for, and causes you to put off work you’ll have to catchup on.
Now, obviously it’s a little more involved then just saying ‘I’ll get someone to do it cheap’ but the above points are at the core of why you should consider use of freelancers within your business. If someone can do it cheaper and better then you, it would be crazy to do it yourself right?
So my question then is, are you making your own toilet paper? Read the rest of this entry