How to make sure that you are getting the value you want out of your outsourcing partner.
The goal of outsourcing is to take have someone or some firm take over the responsibility of some activity or activities in your firm. This could be anything from manufacturing to product design to bookkeeping, marketing, etc.. As a result of outsourcing, your firm should be able to state some gains such as:
- Lower startup costs
- Lower manufacturing costs
- Greater efficiency
- Higher quality of work
- Greater capacity
In order to take advantage of these opportunities, businesses need to go through a process of sourcing their outsourced partners. What this means is that you will plan before you start looking for what need you have to fill. Using the example of bookkeeping, you might make a list like this:
- Make sure that my QuickBooks is always up to date
- Make sure that all postings are accurate
- Reconcile statements
- Provide reports on how my business is doing
- Tell me what the reports mean
- Make me aware of any concerns I should have about my finances
- Make sure that I am tax compliant
- Make sure that I am not wasting money
- Participate in strategic planning sessions
- File my taxes
- Have great customer service
- Be accessible 24×7 to answer questions
From this list, you want to separate out your “must haves” from your “nice to haves.” “Nice to haves” are those things that aren’t essential to the business operations, but make life easier. “Must haves” are those things your business cannot do without. Your expectations must be clear so that you don’t end up getting into a relationship with someone who is performing below your expectations. You want, in fact, someone who is going to invest their energy and resources in your business so that both of you are better off as a result.
Next, you will want to decide on a budget. Again, you will want to do this before you start. Keep in mind that you will want to understand what outsourced partners for your needs will typically charge. Many times, if you come in below the market rates, you will end up with experience, expertise or services – and thus, results – that are equal to your investment.
Think about how you expect to interact with the firm. If it is a software as a service solution, do you need to be able to pick up the phone and reach someone, or is email or Twitter adequate? Is there a training and/or integration component that will make the relationship a go/no go? What kind of time and/or resource investments will you need to make to ensure that the relationship will have solid ground upon which to be successful?
Think about how you will “inspect what you expect.” Is it monthly reports? Product samples? Increased sales? You should be expecting a return on whatever investments you are making, and you need to put that in writing, making the incumbent aware of the expectations so that there is no confusion and so that they can price their services appropriately to have the resources to meet your needs.
Now, you will want to begin looking for your firm. While looking in your network or getting referrals can be smart, understand that your network may only reach a percentage of what is in the marketplace. So, in addition to leveraging your network, take the time to do some research on firms outside of your network. We will typically do an RFP and put it out to a number of providers both in and out of our network. This helps to broaden our network and allows us to find new talent that we hadn’t approached.
When possible, take your time. If you have identified the potential need in your strategic plan, you know ahead of time that at some point, you will need to find this firm. Don’t wait until you are desperate; begin the process of sourcing immediately. Keep in mind that if you choose poorly, the investment you’ve made in sourcing, integrating and training will have been a waste, which could have been avoided.
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 with financial management, product and service production and delivery, outsourced services management, sales & marketing and business growth. We provide them with a number of flexible solutions to help them reach their goals.
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