Forums: Discussions for entrepreneurs and small business.

It's not a question of money, but of strengths and weaknesses.  Those things you are good at manufacturing for instance, you may want o produce.  Those areas that you are weak in, you may want to outsource. 

Take cars for example.  Chevy may be great at building reliable engines.  But, terrible at building car stereos.  So, the stereo systems are outsourced to an electronics company.

What are you strengths and weaknesses?  This is the first question you need to ask.  Then, look at the money issue.  Can you outsource cheaper than you can build a component yourself?

If you are starting a new business, there is no point in outsourcing it. Take some efforts and you will get a flying start. I am never in favor of outsourcing.

There are good posts here...and I will add my two cents.

I agree with those who said to work in the business first before seeking a third party. You need to understand what you are outsourcing so that you can manage it to your advantage. I've seen too many solo and small business owners jump on the outsourcing bandwagon in response to the "gurus" talk about benefits like time savings, money savings, and growth advantage from outsourcing. And I've seen most of these folks end up spending far too much time and money trying to manage their third parties in functions that they themselves know nothing about.

Those benefits can be there, but they are by no means guaranteed, especially if you outsource prematurely or are doing so just to avoid the work yourself. In both of these cases, you give the third party far too much influence on your business. You need to able to manage every part of your business, even (or especially) those that you outsource so that you can manage your provider effectively and (if needed) step in and take over if things aren't working out.

In short, know what function(s) you want to outsource (and WHY), and spend enough time managing those functions yourself so that you know:

• how you want things done,
• what service levels you want from your outsourcer, and
• what signs to look for to make sure things are being taken care of properly (or NOT being taken care of).

Wait until you have these three items checked off, use them to select the right provider, and you WILL get the benefits that all those so-called gurus out there are promising!