In their earliest days of operation, most entrepreneurs take great pride in performing all their company’s tasks in-house, sometimes even personally doing everything. It’s a phase that provides important lessons for the owners and employees, but in time a successful business owner will reach a point where it’s no longer practical to do everything alone.
This doesn’t necessarily apply to the physical process of producing a good; you can maintain a high level of efficiency and still take on the entire assembly process yourself.
In-house vs. outsourcing
Shipping is a different story. Owner delivery can work up to a certain volume, but when you can no longer put the day’s output in your SUV and drop off deliveries on the way home, you have a decision to make.
Certain businesses choose to simply buy vehicles and do their own delivery. That can be profitable if the bulk or weight of deliveries is sufficient to fill an entire truck and keep a skilled driver busy all day. It can also be a good option in the case of particularly fragile or hazardous cargo that needs to be overseen carefully by your own employees.
But for a very large number of manufacturers, savings can be realized by hiring a trucking company to get your product out to markets or customers. These firms can streamline sales by using their specialized experience in route planning, loading, and time management to minimize delivery times and keep your product safe and secure.
They can also avoid the costs of fluctuating shipment volumes. For example, it isn’t economical to own delivery trucks when your only product is Christmas ornaments, because those expensive vehicles will sit idle for a very large portion of the year.
Ironically, many of these trucking companies are their own examples of why you should be contracting out certain business functions. Many of them keep their eyes strictly on customer relations and upkeep of their fleets and personnel. They often don’t handle their own bookkeeping and instead use truck factoring companies to track their mileage, locate available shipments to pick up, and handle a great deal of other office factors.
So to recap, let’s look at some of the key benefits of contracting with outside firms to handle certain functions of your business.
They have appropriate experience. In a way, it’s true that almost anyone can deliver goods. But when it’s dozens of stops per day involving heavy lifting, flights of stairs, and congested city traffic, it’s far more desirable to leave the task for someone who does it all the time.
They don’t influence your product’s characteristics. If the service you need is payroll management, your customers don’t see that. As long as your employees are paid correctly and on time, they will stay with your company and continue to do good work for you, so the use of an outside firm won’t affect your reputation or products.
You don’t shoulder the expense of services when you aren’t using them. If your operation is a fairly clean process, there’s no need to hire janitorial staff. Contract with a cleaning company to handle this work. Again, see the previous two points to add value to this component.
A key in business is to spend money where it pays to spend money, and to save where it pays to save. Analyzing your growing business can put you on a path of moving some other processes into the hands of others to save time and money for your own staff and facilities. Properly managed, it can be a big money saver.