Neil Bromage has run his own small business and is a freelance business writer working on a range of newspapers including The Times, Sunday Times, Telegraph and Financial Mail on Sunday. This book is based on a wide range of columns and Q&As written and answered by Neil for Business Link over a number of years. He is based near Preston, Lancs.
The path to growth is often difficult for small and medium-sized enterprises (SMEs). At some point most will find themselves in the classic conundrum of either being under-manned or under-financed and having their growth unrealised as a result.
With the constant need to cut costs outsourcing has gathered pace in recent years. It has also provided the means to bring a lot of good business ideas to fruition.
There are a variety of reasons for outsourcing, including improved efficiency, cost reductions, and increased flexibility. Situations are familiar, ranging from high-tech start-ups which are unable to raise funds or risk manufacturing their products to companies with cyclical sales, making production planning difficult and expensive.
Small business provides particularly good examples of the opportunities available for successful outsourcing, as the need for managers to be good sales people, administrators or receptionists whilst using the skills specific to their ‘real’ role is ever present.
Every business has core functions or competencies which represent where their profit comes from. It’s the product they make or service they perform. Everything outside this function is secondary and generally capable of being done by someone else.
American outsourcing guru Michael F. Corbett offers a useful test for identifying core competencies:
- If starting today would you do it yourself?
- Would other companies hire you to do it for them?
If it is a core competency the answer to both questions will be yes.
At the start of the 1990s, 50% of the UK’s total output was outsourced in some way. Traditionally this was in areas such as catering, cleaning and security but in more recent times this has extended into sales and marketing, facilities management and telephone answering. The fact is that it’s possible to outsource almost anything.