How can I make a profit by outsourcing?

Are you too busy to get through all those jobs you need to get done to run your business efficiently and effectively? Do you need some extra help, but keep putting off hiring somebody because of the impact it will make on your bottom line? Then read on to understand how you can actually make a profit by choosing to outsource certain tasks.

What is outsourcing?

Outsourcing is contracting a third-party entity to do specific business functions of your organisation. 

If you are already running a successful business you will more than likely have already outsourced some tasks.  Did you get a designer to produce you an ace logo?  That’s outsourcing!  Do you have a bookkeeper and Accountant to keep your books in shape and file your end of year accounts?  That’s outsourcing!

Outsourcing the tasks or functions that you either do not have the expertise for in-house, or just don’t have the time to do just makes great sense.  And while you do have to pay those companies you outsource to, it can actually make you more money in the long run.  A great logo will get you noticed and promote your brand, and bookkeeping and accountants are essential for making sure your business maximises its profits and cash flow.

How do I know what to outsource?

If you are thinking about outsourcing, the first hurdle to cross is deciding exactly which tasks you want to outsource.

Who what why where when how

Take these three steps to help you decide what tasks can be outsourced to maximise your return on investment:

Step 1: Record where you spend your time

Data is key here.  Spend a period of time, say a week or a month, and record what time you spend on every task you do (use an app like Toggl to record your time).  Make sure you record all the time you spend working on and in your business – and that you understand the difference between the two. 

That means recording time spent on income generating tasks, and time spent on those busy tasks like responding to email enquiries, managing your social media channels, bookkeeping, writing and posting blogs, issuing invoices and chasing up payments, etc.  I’m sure you will have a long list of these tasks when you look.

Step 2: Review where you spend your time.

From your list you will be able to identify those tasks that you add value to and that you enjoy doing.  These are likely to be the core function of your business…..after all, that’s why you started it, right?  Those are the tasks that you need to spend the majority of your time on.

You will also identify the tasks that simply have to be done to keep the wheels of your business turning, these are the tasks that you need to look at it further detail to see if you can outsource some or all of them effectively.

That brings us to:

Step 3: Identify discreet packages of work that can be outsourced

The easiest tasks to outsource are those that are clearly defined and have definite outcomes and timescales.  These should be the jobs that you find more time consuming but simple to do, or those jobs that you spend a disproportionate amount of time on because they don’t fit in your core skill set.

For each discreet package of work (whether its one-off projects or an ongoing arrangement) you need to be clear in your own mind of what you want to achieve.  You need to be able to delegate the work with clear and comprehensive instructions.  If you can document each of the following for each package of work it will go a long way to successful outsourcing:

  • Goals – what is the desired outcome?
  • Timeframe – what is the date of any deliverables or reviews?
  • Instructions – what are the steps that need to be taken to achieve the task?
  • Format / brand guidelines – what branding should be used on documentation produced?  Is your contractor representing your company? If they are what values should they be promoting?
  • Communication – how are you and your contractor going to communicate? How often?  How quickly do you want to know about any potential issues that may arise?

Can I really afford a Virtual Assistant?

‘I really need some help in my business, but I can’t afford it right now’

If you’ve followed the steps given above, you will have identified those jobs you are looking to outsource.  The question now is can you afford to pay for it?

You may be surprised to learn that hiring some additional help, like a Virtual Assistant could actually make you money. Let me give you an example below:

You spend 5 hours per week on admin or bookkeeping per week.  That is time you could be using to do income generating work.

If you value your time at £50 per hour, thats an extra £250 per week you could be generating.

A skilled VA will probably take less time than you to carry out the same tasks, for them these jobs will be their core business activity, so it may take them only 3 hours to achieve what you can achieve in 5 hours.

Your VA costs £25 per hour, so thats a total cost of £75 per week.

Now its easy to see that the extra £250 per week you can earn by concentrating on your core business activities far outweighs the £75 costs for outsourcing, giving you an extra £175 profit.

Pound sign

So the question now becomes how can you afford to not pay for somebody to help you with those tasks?

If you’re still not convinced that outsourcing your admin and bookkeeping tasks to a Virtual Assistant can make you money, check out my blog post telling you all the great reasons for hiring a VA

Next week I’ll be talking about what tasks a VA can do for you.  If you want to be notified when my next blog is published or If you found this article useful and you would like to keep in touch with my future tips & tricks, resources and ideas then sign up here to receive my newsletter.

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