Entrepreneurial Outsourcing: Operating Like the Big Guys
Mason Kauffman, Founder and Chairman, The World Logistics Organization
In 1994, when I started Accuship.com, Inc., I had no other employees or investors so I quickly had to learn how to operate as creatively and efficiently as possible. To be successful, I had to evolve from doing everything myself to relying on strategic outsource partners. Once I achieved this goal, I was able to focus on my core business as opposed to just working harder. Other entrepreneurial companies can follow this same formula. Let me share what I learned.
In the past, yours had to be a major company like Microsoft or Wal-Mart to take advantage of strategic outsourcing opportunities. Microsoft has been wise to focus on its core business of software development while outsourcing processes such as manufacturing and distribution. Likewise, Wal-Mart doesn’t make any of the products it sells, sticking instead to its core competencies of purchasing, retailing, and distribution.
Today’s collaborative technologies have now empowered entrepreneurial companies to benefit from the same strategic outsourcing benefits that used to be exclusive to the "big guys." These include capital expenditure control, increased efficiency, labor cost reduction, speed to market, core business focus, competitive advantage, and risk avoidance. The result is that smaller companies can be more efficient and make more money.
Determine Your Core
Outsourcing has become such a common part of today’s business environment that most entrepreneurial companies don’t even realize how much they are already outsourcing.
When I started my business, one of the first steps I took was to analyze each and every thing that was involved in my day-to-day operations and decide what truly was my core business. I learned that what I really had to offer was expertise about how to ship smarter for less money. Next I went through the process of deciding what to outsource with the goal of outsourcing everything that was not core to that expertise.
I started with the more obvious outsourcing solutions, such as renting to avoid facility costs and maintenance, telecommunication services (voice, email, Internet), and computer equipment and software support, but my analysis quickly grew.
Over time Accuship implemented outsourcing options for accounting, payroll, marketing, public relations, advertising, telemarketing and sales support, switchboard support, data entry, system development and programming, data center, IT backup and recovery services, IT Web design and hosting, IT maintenance (hardware, upgrades, virus, and spam control), human relations and recruitment, procurement, and legal expertise.
I then discovered outsourcing consolidation sites, such as Guru.com and Elance.com, which provide access to specialist and expert help from about 10,000 professionals in more than 100 specialized fields. These help small businesses with such services as graphic design and multimedia presentations, engineering, sales and marketing, writing and translation, and more.
I believe in practicing what I preach. My entrepreneurial enterprise, Accuship, is an online service that enables companies to save an average of 20 percent on shipping costs by providing the ability to shop online for the best possible services and rates for all major carriers.
An important benefit of Accuship is that it consolidates all shipping functionality into a single online system for ease of use and management. Think of it as doing for shipping what Amazon does for book selling or Expedia for travel-related services. The ability to consolidate services into as few systems as possible is a very important guideline to follow in all other outsourcing and general business initiatives.
Manage Your Outsourced Services
One final lesson I learned is that you don’t automatically assume your outsourcing solution is working perfectly any more than you would assume your employee team performance is always perfect. While you don’t have to actually "do the work" you’ve outsourced, you do need to manage it. Establish clear, mutually agreed upon Standard Operating Procedures covering all service and performance expectations. Quarterly Business Reviews are recommended to review performance metrics and new outsourcing opportunities on an ongoing basis.
What’s next? After forming my first two companies, I now have come full circle. As I pass over the day-to-day operations of Accuship to my management team, I am developing my third business— The World Logistics Organization—that I think will be even more successful. I plan to do it by going back to my outsourcing roots.
My new logistics venture will build on my core industry connections and the technology infrastructure I put together at Accuship. Today I’m technically a company with one employee. That said, through outsourcing, I have linked literally 1,000 "best in class" consultants, services, and technologies, creating a global network to provide clients with the best source to meet all their logistics needs.
Technology has enabled outsourcing options that never existed in the past. The end result for our company is that we’ve repeatedly been recognized by Inc. magazine on its list of Fastest Growing Private Companies without having to increase our headcount in five years.
To remain competitive in today’s economy, I believe all entrepreneurial companies, both large and small, are well advised to review each current and new business process to determine if today’s new outsourcing solutions can enhance their bottom line.