|Compare outsourcing with performing tasks in-house. Outsourcing is the best solution for those tasks which produce 80% of the work but only 20% of the profits. Any routine task that does not directly impact on the clients' experience....|
How to use outsourcing to increase your efficiency and profits
A business owner or executive is a causative being, a hands-on person whose ability to make things happen is one of his or her most valuable assets.
He or she is someone who gets things done.
And while planning and expertise are also vital to a successful business venture, the ability to DO is what sets the executive apart from others.
Yet there can too much of the good thing because you cannot do EVERYTHING if you want to expand your business.
There's only so much that one person CAN do in a day, a week, or a month.
Therefore, one employs other people to do things.
Yet the traditional solution of "getting additional pairs of hands" does not always serve the best interest of the business venture in terms of profits.
Our outsourcing service can be the answer. Please remember that outsourcing any of the functions decribed on our site does NOT require you to change your accountant or CPA.
More employees equals more administrative work
Every new employee needs some supervision.
Like it or not, the ability to SEE what needs doing is a rare one. You have it but don't assume it's a common human trait.
Supervision in its turn requires administrative tasks, such as monitoring the production of the employee, noticing if he or she has problems, solving those problems, being there to support the employee, arranging all the paperwork that goes with the employer's duties, solving holidays and sick leaves...
...and, in many cases, even having to facilitate his/her personal problems as these impact the employee's time consumption or spirits... and whatnot.
Suffice to say there's a lot of ADDITIONAL tasks involved for YOU with every additional employee.
Which is the way it is, of course... nothing new about that.
But it is definitely a point to consider when you evaluate the alternative of OUTSOURCING some of the functions currently done in-house. Further down this page we look at WHICH tasks you would actually BENEFIT outsourcing and which are best kept within the company.
Before that, let's just compare outsourcing with in-house solutions
Comparing outsourcing solutions to performing tasks in-house
Outsourcing has quite a few benefits, as long as you outsource the correct function to a good service provider.
Outsourcing an activity or task, you don't have any personnel-related problems or duties or expenses.
You don't have to MOTIVATE the performers of the work as it is a simple business transaction, governed by the hard values of commerce.
A different set of rules or legal issues govern an outsourcing solution than employing people.
With the core activities of your company, direct in-house control is absolutely vital and performing it through your personnel is probably the only viable solution.
But that's not the case with the tasks that do not directly impact on the client's experience. For these tasks, outsourcing is often the easier, more cost-efficient, and timesaving alternative.
Outsourcing relieves you of all necessity of having to accept poor quality of work or low productivity due to aspects of human compassion. You outsource the task and the company accepting the assignment produces the results, as simple as that... and without any consideration to the problems they may or may not experience within THEIR business activity.
With tasks performed within your company it is often difficult to predict (or control) the COST of getting something done.
When the work is done in-house, many things can increase the cost of performing a specific task.
Sick leave, sudden problems with computers or software, oddities of human behaviour, lack of responsibility on the part of the person who should perform the duty... (just to name a few) ...all of these can suddenly double or triple the actual cost of having something done.
Not so with outsourcing. Again, it's a business arrangement and all these problems of "human error and nature" are dealt with by the company whose client you are.
If a task SUITS outsourcing then basically you buy the entrepreneurship of the OWNER of the business to whom you outsource the task. It is he or she who will "do it or die trying," no matter if it requires working through the night and over the weekend with no pay.
Thus, when you're outsourcing a task, you will "hire" an EMPLOYER, not an employee, as it were... someone like you who'll bear full responsibility to GET IT DONE RIGHT and on time, someone who GETS things done.
And that's the difference. That's why outsourcing saves you time and money while immediately relieving you of ANY headaches related to supervision or risk having the task performed within your company.
Outsourcing tasks: Which tasks could be outsourced?
When you're considering outsourcing a task, there is a specific guideline to go by in evaluating whether or not the outsourcing of that specific activity would actually benefit your business activity.
You want to be absolutely certain that your decision to outsource the activity is of clear benefit to your business.
You want to ensure that the outsourcing solution strengthens your position and backs up the goals you've set for your business activity.
Viewed from that angle specifically, we cand divide the various tasks within a business activity into two categories:
Tasks within the first category are best kept within your company. These include receiving clients, communicating with them, presentation, sales, delivery of services, after-sales actions, and so on.
These tasks are essential to be held within your direct control and thus have the potential of "the pros outweighing the cons" in terms of whatever administrative tasks come from employing people.
The tasks within the SECOND category can be outsourced and outsourcing these will bring you benefits through saving time and money... and unnecessary headaches.
These tasks that benefit from outsourcing include:
...and so on.
These tasks do not directly impact your clients' experience.
Thus, they can be outsourced if you evaluate that the disadvantages outweigh the benefits of having these functions performed within your company.
Outsourcing as a way of increasing results
There's the old 80/20 rule about business tasks in relation to income produced thereof.
No doubt you're familiar with it.
The rule essentially says that 20% of actions within the company produce 80% of its profits... and, reversely, 80% of the work done contribute maximally 20% to the net profit.
Hence the maxim:
If it doesn't DIRECTLY influence the creating of income and profit, contract it out.
Outsourcing is the solution for those tasks that create bureaucracy rather than profit.
The 80/20 rule of profitable activities has yet another manifestation which is known to most companies who've traded for a few years...
...stagnation of results onto the same level.
Most businesses experience a sort of levelling out of their performance at some point.
That's to say, their business activity produces more income until it reaches an apex and settles on a level and, try as they might, they cannot get the income back into a steeper increase from this mystical plateau.
Essentially what's happening here is that the 80/20 rule has taken hold and expanded beyond.
The problem comes with expansion. The more people you employ, the more tasks you take on administratively more supervision, more in-house communication, decisions, problems, solutions required and so on and the more of YOUR time is required.
Now, as 20% of the daily activities produce 80% of the net profit to the bottom line, the 80% of administrative (not directly income-producing) actions tend to expand MORE than the 20% of the profit-creating actions.
Fundamentally, a good part of those 20% of profit-producing operations are performed or initiated by YOU... and as the administrative demands increase, you'll find less time to devote to that which produces the INCOME of the company.
Thus, a business becomes heavier and its own success creates the barriers which inevitably stagnate its growth in terms of profits and income.
Prioritizing your own tasks helps.
But the problem is that you cannot IGNORE the demands of the administrative tasks either. If you neglect those then these support activities will deteriorate and begin impeding the profit-producing activities.
Ignoring the administrative tasks cuts off your CONTROL of the business activity... and that's really not a viable option either.
Outsourcing can help.
Outsourcing routines that do not directly produce profit
If you consider outsourcing then look at those activities which do not directly impact on your clients' experience and which belong among the routines taking 80% of your time while influencing maximally 20% of your profits.
That way you'll influence the efficiency of the whole business activity and thereby increase its profits.
Outsourcing these task will free up more time and resources for concentrating on those 20% of activities that produce 80% of your profits.
Used wisely, outsourcing saves time and money, giving you "new" resources (space, facilities, etc.) that now can be utilized by the activities that produce 80% of your profits.
That way, the results can only increase.
Why not find out if outsourcing suits your business and what you can win by it?
We offer a free service for businesses within New York, Long Island and surrounding areas to find out what they could win by outsourcing specific back office tasks.
You can approach us by filling in the outsourcing quote form to get an idea of the costs and savings involved in outsourcing back office functions.
You can also subscribe to our Outsourcing Report that gives more information on the benefits of well-chosen outsourcing services.
Alternatively, why not throw us an outsourcing challenge explain the specifics you consider outsourcing and we'll tell you how we would handle it.
There are also specific articles on this web site on outsourcing selected activities, among others...
...and quite a few others, please see the detailed article directory at the end of each page.
To summarize, outsourcing is a worthwhile alternative if a task occurs on a regular basis but has no impact on your clients' experience and the task itself does not belong to those core activities which produce 80% of your bottom line.
Feel free to
contact me personally if you have questions regarding outsourcing!
| Outsourcing articles & services |
Subscribe to this free report on the benefits of outsourcing back office functions and you'll learn how to lower risks while concentrating more on those activities that produce profit!
Comparing outsourcing with in-house solutions
What do you stand to GAIN by outsourcing select back office activities... and how do you know which ones to outsource and which not? This interesting article explains the pros and cons of outsourcing and offers a make-sense tool for finding the activities whose outsourcing brings the biggest profits and benefits.
Want more accurate bookkeeping with timely delivery and without any problems brought to you about it?
If so, read this article about outsourcing your bookkeeping and what that can bring you in terms of benefits...
Give Bookkeepers Plus a challenge!
An easy way for business owners to get first-hand experience on our services. Give us a challenge and we'll tell you how we would solve it... free!
Learn how easily one can make mistake in the setup of QuickBooks and how simple it is to fix these in your accounting software!
|Different functions of bookkeeping read to see what you can benefit:|
Billing & Accounts Receivable
Explained in understandable form what is included in accounts receivable and what you need to look out for in this area.
Accounts Payable & Cashflow / credit
What functions are included and how do these influence your finances and credit rating and how do you speed up the cashflow?
Purchasing & Inventory -controlling cost
Keeping accurate record on purchasing and inventory allows for optimizing of your stock and investment while minimizing downtime.
This area of bookkeeping frees up a lot of your time while ensuring your funds arrive promptly and securely.
How would you like to be free from constant worry and checking of your cashflow and receive some control and prediction to finances?
Calculating salaries is the most time-consuming of all activities. Outsourcing your payroll you gain accuracy at lower cost than handling it in-house.
Financial Management Reporting
The absolute jewel of services, ensuring that you gradually gain full control over financial planning in your company.
An essential service if you have larger jobs or projects coming up which you want to keep under tight financial control. Quality service giving greater financial control.
Taxes and preparing books for your CPA
Why not save some 50% off this part of your accounting by letting our bookkeepers prepare taxes and books for your accountant / CPA? Save money and headaches by...
Useful articles for LI business owners
This page contains articles by Elizabeth Marasco on various subjects relating to taxation, finance, accounting, bookkeeping and other important issues.
Bookkeepers Plus Virtual Assistant
Don't need a full-time secretary or can't afford one? Then the solution is the Bookkeepers Plus Virtual Assistant - you pay only for the work we performed at the quality requested!
Outsource the tasks involved in Human Resources: Workers Comp, insurance, retirement plans, leave maintenance, recruitment, personnel policies, resolving disputes, etc. and save money and time!
Other Credits and Collections actions
These tasks are not very spectacular if done accurately and correct. But if you forget then many unnecessary problems can arise from...
Bookkeepers Plus Office Software Application Training
Read how businesses throw away thousands of dollars monthly... and how you can make sure you don't... and secure it for free!
Keeping accurate record on your sales tax and filing in time is not exciting and thus it suits outsourcing well. Save money while avoiding all problems due to delays or mistakes...
Getting the most out of your QuickBooks? Participate in this survey to find out!
Want to see if you are receiving the true benefits from your QuickBooks software... or check if it could help you more than currently?
About Bookkeepers Plus Inc.
Introducing Bookeepers Plus Inc. the outsourcing expert for businesses in Long Island NY.
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