Special Report: Outsourcing

Our comprehensive guide to where, when and how to use independent contractors

Build a Better Business with Outsourcing

A comprehensive guide on the what, when and how to outsource
When Laura Lee Sparks left her job as a law firm manager to launch her own business, she knew from the beginning that there were certain tasks she didn't want to handle. The owner of Legal Marketing Maven--a firm that helps law firms streamline their practices through outsourcing--Sparks practiced what she preached from the start, hiring an outside bookkeeper and slowly adding to her virtual team of contractors. Within months, her business revenues reached six figures.

In With the Out(sourcing)

Small businesses are hiring more independent contractors, but be aware of the pros and cons.
Ron Vigdor is co-founder of BornFree, a 3-year-old company that makes BPA-free bottles, sippy cups and other baby products sold at retailers such as Whole Foods, Walgreen's and CVS. Vigdor, however, isn't taking any baby steps when it comes to outsourcing. BornFree offloads its logistics, accounting, payroll, taxes, and public relations to third party outsource providers. Even the company's sales team is outsourced.

Do What You Do Best

Assess your strengths and weaknesses, then outsource the tasks that aren't your forte.

Just as any good business takes regular inventory of its physical assets, it's equally important to assess your company's more intangible assets and liabilities. This is true whether you're a startup or a full-fledged, profitable business.

If you're in the startup stage--and likely your company's only employee--then taking inventory of your company essentially means taking inventory of yourself. While it can be difficult to look inward and clearly evaluate your strengths and weaknesses, this step will allow you to make better business decisions as you move forward and grow.

Outsourcing vs Doing it Yourself

When starting a business, it's important to know when to hold tight and when to let go.

Point: Startups should outsource noncore functions.

Each entrepreneur should focus on what he or she does best and outsource other duties to professionals, says David Zahn, president of StartUpBuilder.com and author of The Quintessential Guide to Using Consultants. "If you were hiring, it wouldn't be reasonable to ask the bookkeeper to also act as general counsel, so why would I assume that an owner is the most skilled person at any one niche? As a startup, I can't be expected to be the expert on every single aspect or facet [of the business]. I just need to be fluent in what the expert is doing." If you lack marketing expertise, for instance, it'll often be more expensive in the end to change your marketing than if you had hired a professional in the first place.

Pros & Cons of Outsourcing

Should you outsource business functions or is it better to keep them in-house?

Q: Is outsourcing really a good way to grow my business?

A: Outsourcing has become a big deal in our economy. There are articles and books written on it all the time, and you can attend countless seminars and speeches on the subject. I just did a Google search on "outsourcing" and got 1,130,000 links. You can find a lot of information on this subject, and a lot of opinions on how to do it right or screw it up!

One popular way this is described is that you should decide what you are good at and outsource everything else--i.e., focus your company on your core competency, and let someone else do the rest. That logic is sound in theory, and to a certain degree in practice, but like everything else you can take it too far. The key is to understand your business and its goals and decide how outsourcing might help you attain them.