Whilst outsourcing tasks has become a fantastic way to increase efficiency and effectiveness in business’ of all sizes, the small to medium enterprise owner must remain careful not too outsource the wrong tasks or roles. All too often the roles which produce income are that of an employee or are outsourced, leaving the owner/manager in a back office completing unproductive tasks.
The trap lies in the natural desire for business owners and managers to control the operations of the business. The experienced owner/manager ends up sitting in a back office, managing cash flow, ordering goods and dealing with day to day administration, under the guise of running a business. The critical sales roles are “outsourced”, often to a less experienced sales person, resulting in lower sales figures and therefore a decrease in the crucial driver of profit within the business.
Take the example of a small retail sales business. The owner builds the business to a profitable enterprise utilising their own fantastic sales skills and begins to run out of time in the day to complete all daily tasks and decides to hire more staff. In order to ensure the business cash flow is being utilised effectively and to maximise efficiency, the owner/manager steps out of their sales role and moves into an office based administration and managerial role. The new, inexperienced staff member takes the owner/manager’s role in sales.
The owner/manager was capable of generating revenue of $500 an hour, while the inexperienced staff member can produce only $350 an hour in sales revenue, resulting in a loss of $150 an hour in revenue. The basic administration roles the manager is performing in a back office could be outsourced for anywhere between $20-$60 an hour (depending on the technical skills required). The owner/manager who is worth around $150 an hour more than their employee, is completing tasks worth only $20-$60 an hour. Clearly the wrong role has been outsourced resulting in reduced revenues, inefficient use of human resources and ultimately a reduction in the profitability of the business.
As attractive as outsourcing may appear to business owners and managers as a great strategy to increase productivity, efficiency and effectiveness, care must be taken not to outsource the wrong roles/tasks. Careful consideration of the key drivers within the business, and the outsourcing of roles/tasks which add little to no value to the business will result in far more productivity, efficiency and effectiveness and ultimately increased profits.