Outsourcing Can Save Time And Increase Business Cash Flow

by Doug Smith, President, The Woodhaven Group

If your company is not considering outsourcing some of your everyday business  functions then you are missing out on a golden opportunity to increase your business cash flow.   

Most individuals outsource many of their personal activities and don’t think twice about it.  You can have someone else fill the cavities in your teeth, repair the engine in your car, or even make coffee for you every morning.  Hello Starbucks!  Think of the opportunities to outsource important daily functions in your company such as payroll, cleaning, accounting, IT, invoice billing and processing, human resources, areas of marketing such as public relations, web design, pay-per-click, SEO, media buying and even the call center.  One important area that has been getting outsourced for some time is the manufacturing of products and component parts.

Is it really worth considering for your company?

The benefits are many and the savings  bring more cash into the company to help drive marketshare of the all important core products.  Here are just a few of the benefits:

  1. Less space to rent or own.
  2. Can eliminate office furniture and work stations.
  3. Can reduce the number of computers, monitors and printers
  4. Forget the telephone on that desk that no longer exists.
  5. Less hiring, interviewing and training expenses and the time that goes with it.
  6. No employee benefit cost needed for outsourced employees.
  7. Fewer people problems for your top managers to deal with which means they have more time to focus on increasing sales to your best customers. 
  8. Savings can be channeled into testing new marketing strategies to bring on additional customers.
  9. The company will have flexibility to expand or contract an outsourced function as business conditions dictate. This is a critical benefit in these uncertain times.
  10. Speed of execution.  Having specialists who live the outsourced function daily should assure that what needs to get accomplished is done more efficiently and quickly than managing it inside the company.  When I outsourced manufacturing I found that we got the finished product to the end customer 7 days faster than before.  That dramatically increased customer satisfaction and improved cash flow.
  11. Your company can build a strategic alliance with your outsource partner.  This can allow you to stay more current on technology and new processes than if you went it alone.  The partner  may even introduce you to a new customer.
  12. Quality level  of the outsourced function improves.  We already mentioned speed but when you combine more speed with better quality the company gains a competitive edge when outsourcing.  This edge includes increased  reliability and credibility in the eyes of your customer which allows the company to ask a higher price for its products. The result is more sales and increased gross margin.
  13. Outsourcing allows your management team to concentrate more on all aspects of customer service.  While this area is outsourced in many companies, I prefer to take the savings from outsourcing other functions and improve this critical function into a core competency.
  14. It can reduce the fixed cost of equipment that has to be acquired to stay current with technology, especially in the area of manufacturing.    

Like everything else in your business, the management team must constantly measure the results of outsourcing a specific area or function to make sure the expected  return on investment is being realized.  Some owners and CEOs outsource a function and forget about it. It is important to understand that outsourcing becomes another area of the company that needs to be managed in order to assure success.

Has your company had success outsourcing?  I would like to hear about your experiences.

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