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Old 25th August 2006, 08:13 AM   #1
sannwood
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Default Small Business Outsourcing - We Need Your Help

We received another question from a reader today that we would like your input on. . . .

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I own a small handpainted suncatcher business that I need to outsource to cut my labor costs in order to keep up w/my competition. I have NO idea what I'm doing and am desperate for info and advice. I would prefer to stay within the US but again.. I'm so lost. I appreciate any advice or direction you could provide. Thank you for your time and consideration.
Thanks to all in advance for your responses!

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Old 25th August 2006, 11:52 PM   #2
Karri
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What are the business owners own core competencies? Is her artistry what makes these things sell? Or is this something that can be easily reproduced by someone else?

Sounds like tough questions are required at this point more so than the "right answers."

Just a hunch

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Old 26th August 2006, 08:39 AM   #3
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Even if it is something that can easily be reproduced by someone else, I think there can be flaws with making the following assumption -

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I need to outsource to cut my labor costs
While you may be reducing your labor costs, based on my experiences you also may be increasing other costs. To me outsourcing doesn't 'always' equal cutting costs, there are often hidden costs that are not considered when comparing just labor costs .... but in the end there are still costs (outside of labor) when outsourcing that impact your bottom line.

I always wonder when someone says "i need to cut my labor costs by outsourcing" because my competition is. Certainly you are only following your competition, versus beating them.

I would consider that outsourcing might not be the 'best' solution. I just don't think it is a given as quoted.

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Old 27th August 2006, 09:47 PM   #4
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I'll second the idea of beating the competition, instead of engaging into the price wars. Improving product quality, service quality, adding more personal touch to the product would great immense value and certainly overrun competition.

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Old 12th September 2006, 06:39 PM   #5
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Default Don't Outsource Core Competencies

HI, I have a small business too, it's an ecommerce site, hemp-sisters. About a year ago I was swamped trying to do everything... I was just dying with the workload. It was tough, but my background is sales and marketing... so I outsourced everything except product development (most important part of my business) and sales and marketing (which I can do). I found a great company teamworld.com. They do everything for me know. They warehouse my inventory, pack and ship, invoice, handle customer service and sales calls, process invoices, payments, take care of accounting, send out statements and call on past due accounts, order product when low. Basically everything that I was trying to do. It's expensive, but it's allowed me to have a life. My thought is that you should really consider outsourcing until you're big enough to hire your own staff. I'm still not at the point and may never do this. But when you do outsource, outsource to a company that is near you that you can visit frequently. Make sure they are financially stable, ask questions about their current clients, see how well they maintain their facility, mystery shop the service yourself (call them). I'd move the accounting/financial part last, if at all. That's a cruical piece. Hope this helps. Good luck.

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Old 20th September 2006, 04:10 PM   #6
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If you are seriously considering outsourcing your human resource department, I would consider a Peo. Our company has converted all of our human resources to a Peo. They handle our Payroll, workers compensation, health benefits, unemployment and more. Regardless of the peo you choose I would get several quotes as they all price differnetly. The company we use is PML Worldwide, which has been in business for over 21 years and is one of the longest operating in the United States but there are several others out there depending on what services you are looking for.


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Old 26th September 2006, 09:39 AM   #7
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As I think any kind of outsourcing has to be efficient and either decrease costs or increase revenue. If you are thinking how to lower your costs you need to consider non-American outsourcing. So, you need to choose between saving money and patriotism. If you choose money than you may consider India, China, Belarus or any other country with the average salary lower than $300 per month.

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Old 26th September 2006, 12:17 PM   #8
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Default Saving money vs. Patriotism

I have to dissagree with the previous post when it comes to choosing to save money or being loyal to "Made in the USA". Depending on the product that you are producing, there may be any number of factors that would allow someone to outsource a product to a domestic supplier and still realize cost savings. My company (Outsource Authority, you can find us on the web) does this all the time. We monitor vendor's material inventory, overhead costs, and workload to help our customers save time and money. It is amazing how much you can save by moving the production of a product from one part of the country to another.

Granted, if the production quantities are high enough offshore outsourcing can result in additional savings. But that is not the only way.

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