Outsourcing: What to Keep In; What to Send Out
With worldwide communication in the palms of our hands almost anyone can work from anywhere. Old time salespeople carried heavy suitcase sized sample cases of their lines. Today an iPad or laptop can showcase thousands of products and services to customers.
With networking, CPA’s can check the status of a single store or sales nationwide for their clients. Computer repairmen and programmer’s show up to tweak computer programs to get that last electronic ounce of profit out of their systems. Whole industries provide specific software geared to specialty businesses. Everything from yogurt shops to shoe stores has every keystroke needed to track every penny. Even inventory control automatically orders whatever replacements are needed and schedule them to arrive just in time.
Does Outsourcing Pay?
We’ve all experienced the disaster of online or phone customer service. Companies discovered that call in computer problems were costing too much to be handled in the United States. Healthcare, retirement plans, Medicare, Workman’s Comp and taxes took their toll on the bottom line.
Companies found that people in India and Malaysia would work for much less than even the minimum wage in the US. All they needed was a computer network and the most commonly asked questions and they were in business. However, as many companies discovered there was sometimes a language barrier. Not so much speaking, but trying to understand the person helping on the other end of the line. “Steve” did not sound very American. So companies went back to the drawing board. In this particular example, outsourcing did not pay.
The McDonald’s corporation decided they would try a variation. They found people who wanted to work from home, to save gas and day care costs, could be paid less, and take home the same amount, or more, after the savings. So when you drove up to a McDonald’s in Portland, Oregon the person on the other end of the intercom could be in Portland, Maine. It saved the company money in uniforms and flexible work schedules. If mom had to pick up the kids from school, she’d log off, and someone in Iowa or Louisiana might get the call.
Outsourcing That Pays For Itself
Just as a doctor examines your vital signs during a physical, a CPA examines the vital signs of your business. These would include your cash flow, balance sheet, payroll, inventory and profit and loss statement. It’s the accountant’s job to look for any red flags, or anything that is unusual, or out of place that might be causing a problem to your bottom line. Accountants can easily pay for themselves with tax savings, showing products or services than aren’t profitable, proper pricing structure, and profit sharing plans or correctly setting up your 401(k).
Attorneys are another outsourcing that can pay for itself in savings. Something as simple as not having an employee handbook can put you in court defending your firing of a poor employee. What if a customer is injured in your store or using your product? Even if you are innocent, the cost of defending yourself in court can bankrupt some small businesses. Making sure you are correctly incorporated so your home, savings and investments are not at risk.
Some Final Thoughts
Every decision in business comes down to “risk vs. reward.” Will the risk of outsourcing reap a reward? If so, then it probably makes sense to move ahead. However, there are many things to consider besides the bottom line. Saving money is important, but not at the risk of alienating customers, or compromising quality or service. Make sure you know to whom you are outsourcing to and that they are qualified to do what you need. A great way to do this is by asking other successful business owners whom they use. Being profitable is important, but so is staying in business. Don’t risk a potentially profitable business to shave a few points off the bottom line.