If you are a small business owner, chances are that you wear many hats. The main reason people start a business (aside from working for themselves) is because they have a talent in that particular field. No one knows everything, nor should they. That being said, you shouldn’t be wasting time on tasks that take you away from your area of expertise if you can pay someone to do those tasks, especially if the cost is less than the lost income you face by tackling them yourself. The key to running a business successfully is to put all of your effort into what you do best and outsource everything else so as to maximize the earnings potential of the business. While in the beginning, it may seem like this strategy gives you complete control over your entire business, it could very well be costing you in terms of customers and therefore income. Ultimately, taking this route may end up costing you the business you worked so hard to build, and many times, this happens before you even get very far into the life cycle of the business.
There are several areas of business operation that entrepreneurs tend to do themselves. Not only would you be wasting your time, but the odds are good that an outside person who does those things for a living would be able to do them significantly better and more efficiently than you could. Examples of tasks that are likely better suited to be outsourced are:
- Bookkeeping (ie: billing, sales & payroll taxes, collections)
- Legal Services (ie: drawing up contracts)
- Web Design
For example, if you are a doctor running a solo practice (or a lawyer, or salesperson) and doing the books at the same time, you are costing yourself important billable time (or time that you can be selling). So, if you spend 1-2 hours a day paying bills, balancing the checkbook, running reports, etc. and an hour of your time is worth $100 (for argument’s sake) you are losing approximately $100-$200 a day. That may not seem like much, but pro-rate that over 240 business days (48 weeks x 5 business days conservatively assuming you close for holidays, personal days, and vacation time), and you could be potentially be costing your business between $24,000 and $48,000 a year. Now, if you were to hire an accounting firm that charges even $1,000 a month to handle all of the bookkeeping, bank reconciliations, and report analysis, it would only cost your business a total of $12,000 for the year. This comes out to a savings of 50%-75% annually.
[Of course the figures used are just examples, and if your time is worth more than the value used, you will be saving your business even more money, which ultimately leaves more money for you to either put back into the business for growth or to take personally as salary.]
Even if you already have a bookkeeper on your payroll, outsourcing still makes monetary sense from the standpoint that if this person is very knowledgeable and skilled you are still paying much more than $12,000 a year to employ them not to mention any secondary costs such as insurance, payroll taxes, supplies, etc. in addition to the time when they are getting paid for idle time. The other side of the equation is that you are employing a less skilled and knowledgeable person, in which case you will benefit from outsourcing the accounting duties by not only saving money but also acquiring a built-in support system. Yes, it may be difficult to give up control and oversight over such an important aspect of your business, but then again you most likely went into business for yourself to make money, not to let it go towards costs that you can minimize by taking proactive measures. And, if you do all of your bookkeeping after-hours, wouldn’t you rather have that time to spend with friends and family, and save yourself from getting burned out in the future?
To take it a step further, certain tasks like drawing up contracts should be left to the lawyers as they know exactly how to draw them up in a manner that not only makes them law-compliant, but also protects you against missing vital points within the documents. Something like marketing should be left to professional marketers since they know what works vs. what doesn’t in terms of marketing techniques for a particular industry and target market. There is no reason to throw good money into marketing campaigns that you design if you don’t know the first thing about analyzing a target market, or the expected response rates among the different types of marketing avenues. And when it comes to web design, generally the first thing a potential customer sees that reflects your business, you should always opt for a professionally designed option rather than something that looks like it was done in a matter of minutes with a free program, and that a child could do a better job in designing.
Sure, like anything you can teach yourself to do any task, but you need to ask yourself if the time spent self-teaching is worth more than what you could be making if you were spending that time running your business. You need to consider the fact that these tasks may be (I like to say definitely will be) more effectively and efficiently completed by a professional. The bottom line is that you need to consider the customers first and foremost. They don’t care if you do any of those things yourself or if you outsource, they only care about the product or service you deliver to them. And, if trying to be the jack of all trades is negatively affecting those results in the customers’ eyes because you are spending too much time on projects that are not your bread and butter in terms of skill or expertise, then you probably won’t have to worry as they won’t be customers for very long.
Taking everything into consideration, oftentimes it just makes good business sense to stick to one area and bring others on board with professional experience and expertise to handle all other areas.
Tell me your story: have you ever tried to juggle too many titles only to end up struggling or closing the business? Did you try doing everything only to realize that it was better to focus your attention and find a greater amount of success afterward?