Outsourcing is a necessity, not a luxury for small businesses.
An expression often heard in businesses, especially those facing challenges, is that in order to regain financial health, the enterprise will need to re-focus on its ‘core business’.
Many SME owners who find themselves having to cope with a dozen different tasks a day, probably relate to this, grin ruefully and wish that they could afford the luxury of only concentrating on core business functions.
The irony, says Ravi Govender, Head of Small Enterprises at Standard Bank, is that small business success is most often linked to remaining focused on delivering the products and services that are core to the business’ sustainability and growth.
The key to enabling the people with the skills to place their energies where they are most useful in the company can be achieved by using a little imagination.
The example set by the finalists in the ‘ Think Big - Building Business Champions’ TV series, illustrates that by outsourcing tasks, the scarce skills of permanent staff can be used to maximum effect.
“It is unwise to think that outsourcing is a luxury that only bigger companies can afford. Outsourcing is practical. All that is required is to work out the costs of the service.
It can then be compared to the cost of your inputs, and the potential loss of productivity that can occur if staff are concentrating on issues that are taking their attention away from their primary areas of responsibility.”
“As with most things, outsourcing can only work if the necessary research and planning is undertaken to identify exactly where support is needed, and to find the right supplier,” says Govender.
Thinking about outsourcing should involve:
- Planning the on-boarding of suppliersin a way that does not require a significant time commitment from you.
- Clearly defining the areas that will and will not be outsourced.Strategic company functions should remain with you and full-time, experienced staff. It is important to remember that you only want to outsource activities, and not the management of relationships with your customers.
- Checking whether once-off projects can be outsourcedto outside suppliers at a reasonable, all-inclusive price.
- Reducing the need for technology, as well as the time needed to administer the staff payroll. Traditionally, payroll and HR services are the easiest to outsource to specialists.
- Deciding whether you need a full-time bookkeeper or administrator, or whether you can hand-over these tasks to someone who is well qualified, but works off-site.
- Keeping an eye on costs,and comparing them to the expense of using staff to accomplish tasks. The moment outsourcing costs equal or exceed ‘in-house’ costs, it is time to reconsider.
- Clearly defining the scope of work, deadlines and deliverables on a project.
- Deciding the basis for payment.Will payment to suppliers rely on them completing defined milestones, or meeting weekly or monthly deadlines?
- Putting everything in writing,so that there can be no disputes regarding charges, delivery or payment.
“Although you will be hiring somebody to accomplish a set task, or for a defined period of time, you should take as much care interviewing them as you would when hiring a permanent employee.
"Check references and, if necessary, visit sites where they have previously worked to inspect the standard of their work. Also take the time to check whether they have the relevant experience in the areas you require help with.”
“Lastly, don’t be blinded by price. The best is not always the cheapest. You will benefit by making a careful selection. Ignore quotes that are far below others, as this could indicate, lack of experience, or a supplier who may not be adequately qualified.”
“Above all, remember that it is your business’ reputation at stake. Risking your reputation could have far reaching consequences. Choose an outsourced supplier carefully and monitor what they do and how they do it,” concludes Govender.
‘Think Big’ episodes can be viewed on SABC 3 at 9:30pm every Thursday, with a repeat every Sunday at 4:30pm. You can also visit www.standardbank.co.za/thinkbig to view the show.