Entrepreneurial Outsourcing: Operating Like the Big Guys
September 17, 2012
Mason Kauffman, Founder and Chairman, The World Logistics Organization
In 1994, when I launched Accuship.com, Inc., I had no other employees or investors so I quickly learned how to operate creatively and efficiently. To be successful, I had to evolve from doing everything myself to relying on strategic outsourcing partners. Achieving that goal enabled me to focus on my core business instead of just working harder. Other entrepreneurial companies can follow this same formula. Let me share what I learned.
In the past, only large corporations like Microsoft or Wal-Mart took advantage of strategic outsourcing opportunities. Microsoft focuses on its core business of software development and outsources processes such as manufacturing and distribution. Likewise, Wal-Mart doesn’t make the products it sells, sticking instead to its core competencies of purchasing, retailing, and distribution.
Today’s collaborative technologies empower growing, entrepreneurial companies to benefit from strategic outsourcing just like the “big guys.” Benefits include capital expenditure control, increased efficiency, labor cost reduction, speed to market, core business focus, competitive advantage, and risk avoidance. The result: Smaller companies can be more efficient and profitable.
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 already do.
When I started my company, I analyzed everything in my day-to-day operations to be sure I knew what my core competency was. I learned that it was expertise about how to ship smarter for less money. Next I decided which functions to outsource, focusing on those unrelated to that expertise.
The more obvious were renting to avoid facility costs and maintenance, telecommunication services (voice, email, Internet), and computer equipment and software support. But there were others as well.
Over time Accuship implemented outsourcing 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, Web design and hosting, IT maintenance (hardware, upgrades, virus, and spam control), human resources and recruitment, procurement, and legal counsel.
My next discovery was outsourcing consolidation sites such as Guru.com and Elance.com. These helpful sites provide access to expertise from about 10,000 professionals in more than 100 specialized fields, including graphic design and multimedia presentations, engineering, sales and marketing, writing and translation, and more.
I do practice what I preach. My entrepreneurial enterprise, Accuship, is an online service that enables companies to save an average of 20 percent on shipping. Our service enables companies to shop efficiently for the best services and rates from all major carriers.
We do for shipping what Amazon does for books and Expedia for travel. Accuship provides a significant benefit by consolidating all shipping functionality into a single online system. This service makes the entire process much easier to use and manage. The larger lesson here for entrepreneurs is that an important advantage of outsourcing is consolidation of services into fewer systems. Put it on your checklist when you look for outsourcing partners.
Manage Your Outsourced Services
Another important lesson: While you don’t have to “do the work” you’ve outsourced, you do need to manage it. You can’t assume your outsourcing solution is working perfectly any more than you can assume your manufacturing or service processes are. Establish clear, mutually agreed-upon standard operating procedures covering all service and performance expectations. Quarterly internal business reviews of performance metrics and new outsourcing opportunities are critical.
What’s next? After forming my first two companies, I’ve come full circle. Now that my management team handles day-to-day operations I am developing my third business, The World Logistics Organization, which I think will be even more successful. I plan to do it by going back to my outsourcing roots.
My new venture will build on my core industry connections and the technology infrastructure I put together at Accuship. Through outsourcing, I have linked literally 1,000 “best in class” consultants, services, and technologies to create a global network that provides clients with the best source to meet all their logistics needs.
Technology has created many new outsourcing options. By investigating and employing the right ones, we’ve repeatedly been recognized as one of Inc. Magazine’s fastest growing private companies, and we didn’t increase our head count in five years.
Based on my experience, I believe that all entrepreneurial companies ought to review every business process they have to determine if today’s new outsourcing solutions can enhance the bottom line.
© 2005 Ewing Marion Kauffman Foundation. All rights reserved.