Straight to the Outsource

Feeling the crunch? Then it may be time to look outside your company for help.
Magazine Contributor
3 min read

This story appears in the September 2003 issue of Entrepreneur. Subscribe »

Imagine that a sales genie hovers at the perimeter of your abundant inbox and offers to grant you three wishes: lower overhead, less trifling-matter management and more sales. You'd likely invite said sprite to take a load off and sit a spell, right? Well, outsourcing your sales function may be just the sprinkle of sales magic your company needs right now. Read on for an over-view on determining if outsourcing is right for your business.

  • Bottom-line booster: Salaries and benefits are enormous expenses for any business. "Outsourcing allows your company to eliminate many of the costs associated with an in-house sales division," says Peter Groop, president of Fusion Sales Partners, a provider of outsourced sales teams in Baltimore. Groop adds that outsourcing permits a company to reinvest a greater percentage of its revenues back into the business. Less quantifiable but equally powerful, using an outside team lets executives laser focus on products and service, rather than employee management.
  • Affordability factor: You're paying for performance, so make sure to select the right provider. "Outsourcing should be far more affordable than operating an in-house sales department," advises Groop.

David Gumpert, an expert on small business and entrepreneurship and the author of How to Really Start Your Own Business (Lauson Publishing), says that companies selling lower-priced items are better served by the capabilities of outsourcing. "A $30 widget," he says, "would be much more appropriate for outsourcing than a $30,000 piece of machinery." The reason is the commission paid on each item-about 10 percent of the sales price. So a $30 item would require a $3 payout, but a $30,000 item would cost $3,000 in commissions. Also, selling higher-priced items requires a specialized level of expertise, one that may not be easily bought on the open market.

  • Finding the right talent fit: You're used to researching any other business decision, so start your due diligence on sales providers the same way-talk with colleagues, do online research and keep up on trends through the business press. Groop advises that entrepreneurs ask four questions of potential providers in order to narrow the field: Do you operate on a 100 percent variable cost basis? Will my sales team represent other clients? How will you integrate the team into my existing corporate structure? Will the team assigned to me consist of proven sales professionals?

Be sure to seek out the provider's references, Gumpert adds. For leads on providers, trade organizations and your local chamber of commerce are good resources. And don't forget about using the Web to find talent as well. Turn to "Net Profits" on page 44 for more on Web outsourcing.

Ready to take the plunge into outsourcing? Here are a few ways to prepare, courtesy of Derrick B. Paine, president of sales outsourcing company Virtual Performance Force Inc. in Tujunga, California:

  • Define your needs.
  • Prepare a brief history of your company as a whole and sales operations specifically.
  • Develop a best-case and worst-case "guesstimate" of sales acquisition costs.
  • Interview outsourcing companies to identify a short list of those that can meet your needs.
  • Create a confidentiality agreement so you can enter into candid, full-disclosure discussions.
  • Outline current and future sales plans and goals.
  • Identify your competitors.
  • List your strengths, weaknesses, opportunities and threats.
  • Cite reasons you believe your company is and will be successful in its sales strategies.

Kimberly L. McCall (aka Marketing Angel) is the president of McCall Media & Marketing Inc. (www.marketingangel. com), a business communications firm in Durham, Maine.

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