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Tips for outsourcing your small-business needs

Yes, small businesses can benefit from outsourcing too. More and more of them are turning over parts of their operations to outside experts, allowing owners to focus on critical needs and growth.

Following the trend of larger companies, small-business owners are outsourcing a range of services, from HR to finance and accounting to customer services. But the outsourcing process requires some time and investment to find the right vendor, build a working relationship, and allow your employees to adjust.

Here’s how to evaluate whether outside experts can perform better, faster or more cost-effectively than your in-house staff. You’ll also find advice about charting a path through the come-hither promises often made by outsourcing services.

First, define your core

Generally, the smart strategy is to hold on to operations or areas that define the core mission of your business. Then, consider outsourcing the other operations that are not as strategic.

If, for instance, your point of difference is customer service, make sure you have enough friendly and attentive full-time employees to make good on that. If, however, you promise rock bottom prices, then relying on an outsourcer, such as a Web-based virtual assistant, an automated phone system or an overseas call center, might make more sense.

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Deciding to outsource

For any supply chain function, the most significant decision is whether to outsource the function or perform it in-house. The decision to outsource is made at a strategic level and normally requires board approval. Outsourcing results in the supply chain function being performed by a third party. The process begins with the firm identifying the activity to be outsourced and generally using a make-buy analysis to justify the decision. Only once a high level business case has been established for the scope of services will a search begin to choose an outsourcing partner.

Top 10 Tips for Outsourcing Success

Entrepreneurs and small businesspeople are always looking for creative ways to accomplish more of their business goals for less money. One strategy that can help you save time, money and frustration as you start and build your business is to outsource as much work as possible to skilled, but cost-effective, external service providers.

In my work with Elance Online — an online marketplace that helps small businesses outsource almost any type of project – I’ve talked with dozens of buyers who have successfully outsourced projects as diverse as administrative support, business strategy, graphic design, web design and development, writing and even software development.

When I talk to buyers who’ve mastered the art of effectively managing external service providers, the same themes emerge over and over. I’ve distilled their advice into the following “Top 10 Best Practices” for working with external service providers. Following this advice can help you get the most out of your relationships with external vendors or contractors — whether you use the web to find service providers or are requesting and evaluating quotes from vendors the “old fashioned” way.

1. Clearly define the scope and schedule for your project
This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverables you expect the vendor provide. Give vendors as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements – project schedules can have a huge impact on project costs.

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