We are huge fans of outsourcing repetitive processes for SMEs, particularly processes that respond well to economies of scale. Things that get cheaper but also allow better quality control in larger quantities, things that are complex and subject to regular changes. Compliance stuff like your tax return. They get cheaper, and better with scale, because they need expert knowledge and systems that can be difficult and expensive to maintain in-house.
But there are some things you should never outsource. I mentioned in a previous blog post that you have to own your profit. That all business owners need to be able to jump into the accounting software and run a P&L. Know how to drill down to see what’s coming and going.
The profit is the here and now of your business, but even more important is your plans for the future. And I don’t just mean the big blue sky plans, I’m particularly talking about the week-to-week cash flow projections, and the month-to-month profit projections, the powerful tools that test if you can reconcile where you are now to your bigger plans.
One of the main reasons for this, that I have seen time and time again over the years, is that any forecasting worth its salt requires a feedback loop, the process of comparing your short term projections to what actually happened, it need not be a formal feedback process, just thinking about it regularly is enough. Each time that happens you gain more knowledge about the winds and tides effecting your business. You get better at forecasting, but what that means is you get better at anticipating the action you need to take to achieve your goals. Learning what works and what doesn’t.
If you have internal accounts staff get them to prepare the forecasts by all means, it’s important that they learn too, but take the time to sit with them weekly for cashflow, and monthly for profit forecasts, to test line by line. I believe it will be the most productive time you can ever spend on your business.
If you don’t have time, outsource something that takes up lots of time but won’t change the future for you. It can be critical, complex, and core to your business, but you don’t have to watch the sausage being made every time. Something like ISO, month end accounts, or payroll.
Have a lovely future day.