Overview
I was raised by a father who taught me to do things for myself rather than pay someone else to do it for you. Does this sound familiar to you? Maybe your parents said the same to you. This may be ok for getting stuff done around the home like mowing the lawn and doing the ironing, but it’s certainly not a good practice for business.
Most of us feel good to be able to ‘do something ourselves’. We probably feel it’s quicker and cheaper. The trouble with this approach is that it blocks our business growth. I’m talking about activities such as administration, bookkeeping, record keeping and routine maintenance. Trying to perform these activities on top of our high-value activities such as gaining new customers, and product and service improvement will eventually overwhelm us.
So, as a busy SME business owner, how do you devolve some of your activities so that you can focus on the high-value ones? By devolve I mean transferring and this can be achieved by either automating, delegating; or outsourcing a business activity.
To help decide what to devolve, identify criteria, which is relevant to growing your business and protecting its value. Some examples include:
- Generate additional sales and revenue
- Gain new customers
- Increase customer satisfaction
- Improve product or service
- Improve productivity
- Reduce costs
- Reduce major risk
- Help gain and retain key staff
If an activity helps you to achieve one or more of your desired criteria, then you should probably keep doing it. If it doesn’t directly achieve or support one of these criteria, then consider devolving it. This is essential to free you up to perform the activities that support your business success, as defined by your criteria. Examples of high-level activities include preparing quotations and proposals, product and service improvement, networking to gain new clients and managing staff and sub-contractors. As the cliché goes, it’s about working on your business.
Deciding the best approach
Devolving can be achieved by either automating, delegating or outsourcing. By automating I mean getting machines and computers to process work with minimal human effort. Delegating is about allocating an activity to one of your staff or direct reports. Outsourcing involves engaging someone outside of your business to perform the activity, usually on a commercial basis.
It’s important to note that devolving is about transferring the performance of the activity to another party to free you up for more important activities. However, this doesn’t include transferring responsibility for the outcome of the activity. That remains with you as the business owner or manager.
From your ‘to be devolved’ list investigate what activities can be delegated automated and outsourced. Here are my suggested rules of thumb for deciding which approach to implement regarding each individual activity.
- If the technology exists and is affordable for your business to implement, then this should be the first option. Examples would be automated scheduling systems and inventory management programs.
- If the activity is dynamic, that is, it is often changing, varies due to changing circumstances or may change significantly in the near or medium future, then it’s probably best to delegate it to a staff person. However, this is assuming that the staff have the capacity and skills to perform the activity.
- If neither of the two criteria is met, then consider outsourcing to a specialist provider. These usually have the expertise and the economies of scale to perform the activity cheaper and better than what you can, so it makes sense to utilise them. Examples include bookkeeping, human resource management and routine equipment and property maintenance.
You may also be able to implement a hybrid of automating and delegating. For example, an activity could be automated before giving responsibility for its execution to a staff member.
Now let’s consider strategies for successfully implementing these approaches in your business.
Automating
Firstly, a quick check of the market to see if suitable technology exists and is affordable for your business. It’s not worth proceeding to the next stages if the technology is beyond your means in the short term.
Secondly, confirm that the activity being considered is stable and won’t be subject to change in the near or medium-term future. If it is, then wait until the changes occur before automating. These are usually repetitive tasks that are performed manually so you can prioritise them for automation. Re-entering data manually from one system to another is a classic example of a task worth automating.
Thirdly gather data on your current activity to identify information such as workflows, volumes and timing of events. This is valuable information for the implementation stage
It’s also wise at this stage to make sure the activity is being performed correctly and as efficiently as possible. After all, if you’re automating a sub-optimal process, you’re just amplifying the inefficiency!
Finally, select the technology most suitable for automating the activity. The Factors such as costs, reliability, after-sales service and support should be considered as part of the decision making. Perform a cost-benefit analysis to ensure that the expected savings and benefits from the automation will outweigh the costs before the purchase is made. Take a medium or long-term view when doing such an analysis.
Delegating
Firstly, decide if your staff have the capacity and skills to perform the activity. This includes defining exactly what will be delegated, the most suitable staff member to perform the activity, any training and instruction required and the timing of the start date. A simple one-page plan goes a long way towards ensuring the transition will be successful.
Secondly, communicate the desired objective or outcome for the activity. No matter what type of activity you’re delegating, make sure to take the time to clarify the activity’s objectives and standards. Communicating the reason for doing something encourages people to be more focused on the activity. Give people a ‘because’, even if it seems obvious. An example would be: ‘receiving and entering customer order details correctly into the online order template because our company wants to supply the correct goods and services to our customers. Specifying the reason protects against the possibility of miscommunication or a failed execution of the activity. It’s always a good idea to put it in writing such as an email or written job instruction.
Thirdly, allocate the staff member most suited to performing the activity. Your staff will have unique skillsets, preferences, and talents. Try to match the activity with the person most likely to succeed in performing the activity. This needs to be balanced with fairly apportioning all the activities you plan to delegate amongst your staff, so no staff member is overloaded.
Finally, follow up on the delegated activity to ensure the work is performed according to the required standard. Acknowledge and praise staff when they have successfully performed their allocated activity. Ask them if they were comfortable performing the activity and if you’ve given them all the information they needed. Ask how effective you were in setting expectations, and if your timelines were reasonable.
Outsourcing
By outsourcing, I mean engaging another entity such as a supplier or sub-contractor to perform the activity on a commercial basis. Some basic examples would be engaging a bookkeeper to record your financial transactions, a virtual assistant to take calls and book meetings and engaging a company to perform your routine property maintenance.
Now sure, it’s going to cost you, but it’s better than costing your precious time and effort which is better devoted to the high-value activities that will help make your business more successful. Remember to define your desired business criteria, as discussed in the Overview section of this article. I suggest doing a simple cost-benefit analysis to confirm that the cost of outsourcing will be outweighed by the expected benefits.
The first step is to clearly define what is being outsourced. This includes details such as the business activity or function, objective, standards, quantity and location if relevant. This information needs to be in writing in the form of an order, contact service level agreement or similar document. This action is important for both parties.
The second step is to engage the right party for you. While their ability to perform the activity to your required standards is critical it’s also important to engage an entity that has similar business values and approach to your company as this enables a harmonious relationship between the two parties. It’s important to consider the party you’re going to engage is not just a supplier, but a partner with whom you can have a long-term relationship.
Thirdly, as an SME owner or manager, you will most likely need to manage the contract with the supplier, so you will need to allocate some time and effort for this responsibility. However, this should be a lot less than the time and effort that you apply to currently performing the activity, otherwise there isn’t any point to its outsourcing.
Finally, make sure that you maintain control and ownership of any data involved with the activity. Anytime you outsource you lose some level of control over the process and the data. However, you need to ensure that any data being used by the contracted party is able to protect from loss and theft. This is especially important if they are using data about your customers. All the data used for the contracted activity should be returned to you at the conclusion of the contract and unless required by law, your data should be deleted from their systems.
Summary
In summary, the key message is that if you are feeling overwhelmed as a business owner or manager because you are responsible for performing too many activities, then it’s probably time to devolve some of those activities. This can be achieved by either automating, delegating to staff or outsourcing to external parties. Devolving will enable you to focus on high-value activities that will help grow and protect your business going forward.
The key steps and strategies for automating, delegating and outsourcing were described. However, note that while the performance of the activity can be devolved, responsibility for its outcome remains with you as the business owner or manager. For further advice and assistance with priority setting and devolving your business activities, contact me on mobile 0402843314 or john@johntedesco.com.au
