7 Tips To Begin Outsourcing
Many self-employed business owners, work somewhere between 40 and 80 hours a week. It can be a lot of stress to own a business and handle every single task and responsibility. That is just one reason to consider outsourcing – save your sanity and spend more time focusing on you and your family.
Another reason is that your time may be better spent focused on particular tasks while letting other specialists handle tasks that are time consuming or perhaps beyond your list of skills. Many business owners don’t think they can fit outsourcing into their budget. Most often, that simply isn’t the case. We’ve included a few steps to determine if outsourcing is an option for you as well as steps to determine what you might want to outsource first and how you can find the right person for the job.
Step 1. What are your net profits?
Calculate your net profits. Net profits are your total or gross profits less your expenses. You can use your net profits for the past month or the past year, which ever makes more sense. This number is important because it will help you not only determine how much to spend on outsourcing, or how much you can budget, it will also help you determine how much the task is worth. For example, if you are considering outsourcing your copywriting tasks and you know that copywriting generates half of your profits, then you know that it is worth more than your hourly value which is what you’ll calculate next.
Step 2. How many hours a week do you spend doing business?
When you own and operate an online business, it is easy to lose track of your actual work time. You may think you put in 8 hours a day but when you actually track it you may find that you spend a tremendous amount of time on home repairs or chores and your work day is actually only 4 hours long or you may find that even though you get a late start during the day, you work late into the night and average 10 hours a day.
To understand the true value of your time it is important to determine how many hours a week you actually work. Using one of the many tools available online, a simple spreadsheet, or heck even a pen and paper, track your time for a couple of weeks. It is important to be as accurate as possible. This information will be necessary to help you make important outsourcing decisions in the future.
Step 3. What is your hourly value?
This number may surprise you. Don’t be negligent with this step, it is critical that you understand what every hour of your time is worth. How else will you decide if the job is better handled by an outsourced provider? Fortunately the calculation is easy. Divide your net profits for a month or year by the number of hours you worked during the same period. If you haven’t been tracking this information go back and track it for a few weeks. You cannot come up with an accurate value based on a guess of how many hours you work. We almost always overestimate.
If you’re using a year of net profits, multiply the number of hours you work in a week by the number of weeks you worked last year. If you worked 40 hours a week all year long it would be 40x52 or 2080. Assuming your net profits were $80,000 and you worked 2080 hours, your hourly value would be about $38.00/hour.
Step 4. Decide what to outsource.
There are a number of tasks you may be considering outsourcing. They generally fall into a few categories:
Administrative tasks.
These are often time consuming tasks that do not have a high hourly value, yet they need to be accomplished to make your business run effectively and efficiently.
Professional tasks.
These tasks often fall under the realm of copywriting, scripting, managing an affiliate program, marketing tasks and the like. They are important to your bottom line, however they can be effectively handled by an outside professional at a nominal hourly value.
Technical tasks.
These are tasks that may take you some time to learn how to do. They often fall under the realm of creating software, databases, special web languages, and so on. These are time stealers simply because of the time it would take for you to learn how to do these particular tasks. Their hourly value can be quite high. The impact on your bottom line varies from task to task. If you’re creating a new web element, it may contribute directly to profits.
Take a look at the tasks you’re considering outsourcing. Where do they fall in these categories? Why are you considering outsourcing them? Determine what your more profitable tasks are and what your least profitable tasks are. Look at the tasks that take you the longest to complete. Perhaps creating copy for your website takes 10 hours a week. At an hourly value of $38 dollars, that adds up to about $380 dollars. Could you hire someone to do it for less? If the answer is yes, could you use that newly gained 10 hours to accomplish a task that will contribute to your profits and thus increase your personal hourly value?
Step 5. Create a budget for your outsourcing needs.
Take a look at your current profits and expenses. What outsourcing tasks currently fit into your budget? When outsourcing, it is advised to begin with one task at a time. Don’t jump into it and begin outsourcing half of your tasks. You may easily go over budget and you may begin to feel like you’re losing control over your company rather than gaining control of your time and your profits. Name a single task you’re going to outsource and devise a budget around it.
Step 6. Find your pro.
Now that you know what the job is going to be, it’s time to begin looking for someone who can fill that need. Find and interview candidates for the task. A great place to start is right in your own backyard. Do any clients or associates know someone who might be interested in the job? What about forums and chat rooms? Local networking organizations are also an excellent place to begin looking for an outsourced professional.
Lastly, take a look at some of the freelance websites. These sites allow you to post your job and take bids on the fee. These are good locations to find self employed individuals, however the bid for fee based system can leave you with some really low quotes in the beginning only to find that the quote doesn’t include half of what you need.
One of the benefits of outsourcing is that you don’t have to pay for taxes or benefits. When outsourcing, it is wise to compare rates, experience, and to check references. Once you have a candidate in mind, you may want to hire on a trial basis just to make sure the set up is working for the both of you.
Step 7. What are your outsourcing goals?
Outsourcing happens for many reasons. Maybe you want to open a new business and you need to open up some time to focus on it. Maybe you really don’t like copywriting and paying someone to do it for you is a sanity saver. Maybe you simply want to spend more time with your family or on that new addition that you started last year but haven’t had time to get around to finishing. If your goal is to make more money, then spend your newly found free time toward that goal. If your goal is to find more time in the day to spend with your family, then hire toward that goal and spend your newly found free time with your family.
Outsourcing is a fantastic tool and a good business practice when it’s handled correctly. Keep these 7 steps in mind when you’re laying out your business plan for the next year. You just may find you’re able to double your profits and free up some time to enjoy it. |
