When we start our businesses’ most of us are a solo show. We are the CEO, CFO, admin, and marketing departments all wrapped up into one. As our business grows, so does our schedule, and reaching the tipping point where future growth is hindered by our full capacity is inevitable. This is when outsourcing comes into play as a logical business step.  

Questions To Ask Yourself Before Outsourcing

Am I ready to outsource? 

If you are considering outsourcing, it can feel like a giant leap. If you are overwhelmed & overworked, you are probably realizing that something has to change. So realistically what are your options?

  1. Offboard clients & downsize to a capacity you can manage. 
  2. Offboard clients and increase prices to reduce your time commitment without affecting revenue. 
  3. Look to outsource to hand off some tasks to someone else. 

If you are confident in your prices and want to continue to grow, then adding capacity is a worthwhile consideration. 

When is the right time to outsource?

The right time will depend uniquely on you, your business, and your risk appetite. Some business owners will outsource from day 1 and immediately hit the ground running with a fully-fledged team. This is a great option to produce results fast, but also requires greater access to capital and greater acceptance of the risks involved. 

Other business owners will seek to hire once their business concept has been successfully tested and they need to hire to grow. This option is preferred, as it requires less risk and allows the business to grow slowly as the customer base grows. 

What roles/tasks should I outsource first?

In episode 3 of Financial Conversations, Danielle Wiebe (founder of Business Babes Collective) suggests starting with an audit of all tasks that you do in your business on a day-to-day basis. Focus on outsourcing tasks that drain your energy, are repeatable, or are tasks that you don’t enjoy. Avoid outsourcing business-critical tasks, the sales function for example is one of the most important aspects of any business and is often the last function to be outsourced. 

While you are completing a task audit, remember to take process notes. Investing time in process mapping and operational efficiencies will help to ensure the business is operating effectively. It is also useful for your new hire to have a comprehensive and documented task list, making their onboarding a smooth process. 

Can I afford to hire?

Hiring or outsourcing is a significant investment. Salaries are usually the largest operational expense and ensuring the business can support that commitment is essential. When considering the financial impacts, it is easy to focus on the financial gains that come with having more time and space in your business to focus on growth. These gains however can take some time to realize, therefore, in the short term you should be clear on:

  1. Consistent business profit, and its ability to support the new hire.
  2. A healthy business cash flow. Is there sufficient cash available to cover the position or is the business going to be relying on unrealized sales?
  3. The additional costs of the new hire. Not just salary, but any additional expenses required. E.g. Laptops, additional software subscriptions, coworking memberships, etc. 
  4. Where are the risks, if the business doesn’t meet its goals what will be the impact to profit?

Can I afford not to hire?

The number one reason to outsource is for business growth. Either you are at a point where you are ready to move your business to the next level or you are not. Doing a side-by-side forecast comparison can be a useful tool in making this decision. A thorough review of how you expect your business to perform under option A: continue with the current model, or option b: outsource and propel growth. 

Lastly, it is important to understand how you will track the success and improvements in your business. Outsourcing should produce a measurable business result, this could be revenue growth, reduced hours completed from you, and/or new sales. Whatever your metrics tracking them regularly will give you peace of mind that you are on the right path it will also be an early indicator if changes are required. 

Have more financial questions? Tune in weekly to ‘Financial Conversations’ the podcast at www.financialconversations.com, Spotify, or Apple Podcasts.