Several weeks ago I posted an article hinting why some businesses struggle / fail. Their business model is fundamentally flawed as it relies on the founder to be paid below market wage and/or are not able to reasonably scale without their superior expertise and / or add the necessary operational staff (referring to getting through the “black hole”, prior to getting large enough to support internally). If you’re already in an established firm / industry, are you moving with the trends keeping up or ahead of your competition? This leads to some pretty big questions:
- are you really servicing a need that the market is requesting? i.e. can you charge enough money to be profitable and/or has the need changed
- is your business model suited to fill it in the way you wish?
- do you have the focus / expertise to really take advantage of the current opportunities, changing landscape, and provide superior / differentiable service?
Well, 1 & 2 are fundamentally too big for discussion here (maybe a post for a later date). But 3 can be addressed, as it looks like the classic problem of how to remain focused on production, while having finite time and all the noise of an operating business.
The Company You Keep Can Be The KEY
One of the the best ways to mitigate the possible issues from point 3 above is to get a team of strategic service providers / consultants. For the smaller firms it is much cheaper than an internal hire, and for both smaller and established firms a new set of eyes can bring fresh ideas and perspectives. The five top reason to outsource are:
- Save Time – one of the main reasons should be to free up your time in direct work, or the additional work required to possess the necessary expertise. (I’m not advocating CORE roles, as I believe that it is critical as a business owner / manager to be able to do the work you are asking your team to do. But instead the operations and administrative roles: marketing, accounting, HR, finance, legal, etc…)
- Increase Focus – by freeing up your time you can focus on providing superior service, developing your business model, and taking the business to the next level….
- Be Accountable – it’s a funny thing in human physiology, but we tend to attribute more value to things we pay for even if they were available for free. By paying an outside agent, it will make you more accountable, for two reasons:
- it is now a line item, so you must make sure your getting a ROI from the direct spend (this also translates well to requiring your own staff to be accountable)
- if they are worth their salt, they will be asking questions / presenting options, making you think of ways to better your business / operations
- Create A Deep Organization– a strategic partner creates depth in two ways:
- they have superior expertise that you could not support / justify in wages and organizational size, and in some cases may not want to i.e. digital marketing changes on a daily basis, so some things are better left to the experts forever more!
- IMPORTANT – a strategic partner has their own organizational depth, taking risk away from you…no sick days, no vacations, etc… They have to deliver, rain or shine!
- Use As Consultants / Recruiters – okay this is technically two points, but highly related. Many of your partners will work with many other businesses. Within many different business models and industries, this can be tapped by asking probing questions about directions you may want to go. Appeal to their egos, and you will get more bang for your buck! Also, when you have reached a certain level where you may take some functions in-house i.e. accounting, many of these individuals are well positioned to recommend people for you, as they know your business inside and out, and know that industry. Another win-win, as you get a great organizational fit, and reduce recruiting time and cost!
HOLD THE PRESS!
With all that being said, it’s critical to pick your partners wisely. You need to make sure they can do what you need them to do, are willing to challenge / guide you (remember they should be the experts), and know when their own lifespan of usefulness may expire. Many of these partners will be a piece of your growth puzzle, some more so than others. So make sure you know where they fit in, for how long, and do your due diligence before handing over your time, money, and keys to major operational business roles.