The ‘make or buy’ method of filling your business needs.
“Outsourcing is like a box of chocolates; you never know what you’re gonna get,” could have been a line from Winston Grooms’ 1986 novel “Forrest Gump.” While businesses consider the idea of working with outsourced partners, many don’t know how much they should be paying for what they are receiving and how to ensure that they are getting value for the money they are spending.
Your job, as a business leader, is to increase your company’s profit. Bottom line. That means that your best interest is in focusing on the things that move you closer to profitability, which is the production, sale and delivery of profitable goods and services. When you have to focus on other things, such as administrative tasks, marketing, etc., you are effectively taking your eye off the ball. If you are a growing company, you know how essential each moment you have is; time is not forgiving and wasted time cannot be refunded.
To focus on business growth, you must get non-business critical activities off your plate, such as bookkeeping. T do so, you have two options, known as “make or buy.” Make or buy means that you will either have the books done by someone in your company by an existing staff member or one you hire, or you will outsource it to a firm whose competency is in bookkeeping.
If you “make” your bookkeeping, you will train someone on your staff to do the bookkeeping for your firm. This may work for your firm, if this person exists. However, that person will be limited by what you (remember to) teach them. You will still need to check their work, make sure that deadlines are met,and ensure that bookkeeping records will be handed over to a CPA who is not involved in your daily operations and may not completely understand your business.
You could, of course, hire someone just to do your books. If you hire a CFO, they should be able to meet all of your financial needs, provide the company with direction from a financial perspective, help avoid or plan for changes in the tax laws, etc.. However, this is not without a cost, which according to payscale.com, could come to the tune of $61,000 – $264,994. Your business may be too small, at the moment, to justify this expense.
The second option would be to “buy” the services, typically at a fraction of the price through an outsourced agency such as B2BCFO, CFOWise or any number of other firms. Buying the services would (should) relieve you of the hassle of having to train someone (make) and should give you the assurance that you are getting the level of service you need without paying a price that will hurt your business. (DO expect to pay an hourly rate that is higher than you would pay a staff member, but keep in mind that you will use fewer hours to get the same work done.)
Choosing to make or buy, then, is a conversation around quality, budget and expectations. By starting out with the end in mind and creating your expectations up front, you are in a better position to choose the appropriate source to fulfill your company’s needs. Choosing the first company that comes along or the cheapest company you come across may, in the end, cost you more. You are looking for a long-term strategic partner that will help you (by the work they are doing) grow your extraordinary company.
Aepiphanni Business Consulting: The Business Strategy People is an Atlanta, Georgia based Operations Management and Business Strategy Consulting Firm dedicated to serving the needs of small to medium sized business leaders. We help business leaders DESIGN| CREATE | BUILD extraordinary businesses. We support our clients through advisory services in the areas of management, strategy and outsourced services in order to help them set, pursue and achieve extraordinary goals.
Join us for a 30-minute complimentary Coffee & a Consult, to learn more about Aepiphanni and how we might help you move your company from existing to extraordinary.