Outsourcing to Create Leverage

Hello everyone and welcome back to this month's edition of Building Value. As most entrepreneurs know, and even some will admit, we like to have control. Oftentimes that single reason is the reason we even have a business today. We like to push on things, question why things are the way they are, and ultimately we like to control our own destiny. And while it's that control that often drives great results, it can be, without us even realizing it, the biggest driver also holding us back.

Now, what do I mean by that? I mean that if we were to step back and do an honest evaluation, I'm willing to bet that there are one to three things that you are determined to maintain control of that someone else does better than you. Further, by them being more expert or a specialist, I'm also willing to bet that you'd be able to find a way to incorporate that product or service into your business, leveraging that expertise to free up your time, your energy, and your resources, which in turn would likely lead to an increase in your business, an increase in your time, an increase in your effectiveness, and an increase in your revenue and profits.

Now, if this is the case, why is it that we so often find ourselves holding on for dear life? Two reasons, really. One, as I mentioned earlier, it feels good to have control, and we would rather be responsible for any failure than to outsource potential for failure or let that decision get outside of our line of sight at all. As an aside, this is why so many of us also have a hard time delegating, another way that we cause massive bottlenecks as we try to scale.

The second reason is that these solutions, these products or services, these experts, cost money. Now, this is a little bit of a forest-through-the-trees issue, and too often we view capital expenditures, or spending money, as a detriment, detracting from the money that we can spend in other areas of the business or even take home as profits. We have a hard time accepting that sometimes we need to spend money to make money and unlock our true potential. Now, this certainly doesn't mean that you do this indiscriminately, but wisely and within the context of your business goals and strategy. At its core, the goal of spending money is to increase your profits. Every dollar spent should return more than that dollar, ideally a good bit more, immediately or in the near future. Otherwise, you'd have been better off doing nothing at all.

Now, let me give you an example. One business owner selling apparel was a huge part of the workflow in getting their products to their end customers. They received the apparel from the supplier, took inventory, repackaged it, and sent it to their distributor. Only then was a product in a position to be sent to a purchasing customer. Now, needless to say, this added a lot of complexity, a lot of time, and a lot of bottlenecks. So what did they do? They cut themselves out of the picture. Instead of receiving the inventory directly, they began to have it shipped directly to the distributor, who did all of the counting, packaging, and mailing from there. Did this cost them a few more dollars per item? Yes, certainly. But almost immediately, due to unlocking several of these constraints, their sales went up exponentially.

Now, you don't have to be great at math to understand that if your original profit was $10 per item, but due to various constraints you could only sell 1,000 units, upgrading your processes to allow you to sell 10,000 or 100,000 units at $5 profit can make a big difference in a hurry. I encourage us all to think about ways in which we may be the bottleneck in our business and workflows. Find your experts, and then leverage them intelligently. I think you'll be amazed at what you can unlock. Thanks for joining me, everyone. Until next month, keep building value.