Archive for May, 2011

How to take the risk out of outsourcing

A growing number of businesses are looking externally to carry out aspects of their operation. Is this trend the result of the recent recession?

Businesses always encounter periods in which they need to draw upon the expertise of someone else to carry out a function that will improve their business or to cut costs where staffing is concerned. But the question we’re left with is if the economic climate wasn’t so challenging would they still be so keen?

New businesses usually tend to take on every aspect of their operation themselves but as they start to grow, the idea of outsourcing
becomes very appealing and many see it as a way of cutting costs and buying expertise without the hassle of employment issues. Like a wave effect, eventually that same business will bring everything back in-house again to re-establish control when they become even bigger.

There are a number of benefits of course to outsourcing, most notably the fact it allows you to concentrate on what you’re good at. It provides the perfect opportunity of acquiring the skills of external experts who can help give you a competitive edge and can reduce staffing costs.

However, there are as many pitfalls as there are advantages. You don’t have direct control, service delivery can be hit and miss and you can occasionally encounter problems with confidentiality.

There’s also the issue of training. If you’re outsourcing call centre work, they have to be able to deal with every eventuality facing them and how long is this training going to take and cost?

Obviously if you’re outsourcing overseas there are also big cultural differences. And when people already have staff and say they’re going to outsource does that create issues with the current workforce?

It is for these reasons why 50% of outsourcing fails.

But lessons have been learnt and there are factors which give outsourcing a better chance of working.

If you want to outsource, use it for secondary functions only such as IT, Lead generation, HR, and PR & Marketing.

There’s also a greater chance of success if time is spent building a relationship with the outsourcing agent and the expectation needs to be very realistic. Business people need to research the provider’s track record, take bank references, check out how stable they are and create a ‘ways of working’ document between the two parties.

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What makes a successful business?

Successful businesses are built upon three key components: the ability to be flexible (researching the marketplace to ensure the product or service continues to satisfy customers), the ability to achieve high levels of customer retention and the ability to employ the best people for the job.

In today’s economic climate, businesses have two options: sticking to their guns and believing in the value of their product to achieve success or giving into fear and remaining static.

Companies who constantly complain about being unable to get the appropriate staff and consider the competition to be stronger, face the danger of becoming stuck in a rut. Many become trapped in the mindset of reducing prices to keep hold of the customers they already have and consistently try and customise products to retain them.

Successful businesses, however, have already researched the market and have done their homework. They know exactly the merits of their product and stick with it. Many actually raise prices because they have already established what their customers like.

Customers want to buy ‘the experience’ and they are prepared to pay the price. The challenge for the business is to keep moving forward and delighting their customers to retain their loyalty.

Contrary to popular belief, businesses which are the first in the marketplace with their particular service or product are riskier ventures. The most successful businesses copy what everyone else is doing because it’s a tried and tested model.

Businesses which are second or third to arrive in that particular sector are usually more successful.

Are businesses successful because of the people they employ or the systems they have in place?

Many entrepreneurs believe that people are the key to success. However, the people you think are the best people for the job might not be. Long-serving employees are very loyal but can be very resistant to change and like the thought of a comfortable working environment.

They are not always the best option when it comes to driving your business forward and gaining that ‘edge’.

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Manchester – Business Discussion Forum Event

The next meeting of the Manchester 1 Premier Business Forum is on Monday 6 June at 1.30 – 5.00pm – please ask us for details.

Please let us know if you would like to attend any of our groups in Leeds, Sheffield, Wetherby, Manchester or Bradford over the coming weeks..

Last month’s meeting was excellent with some good quality discussion and suggestions from the guests that attended.

With 9 groups now operating, the main issues across several discussion groups
included: –

–          Increasing customer engagement, when your product range is limited.
–          Outsourcing to increase competitiveness.  The advantages and pitfalls.
–          How to build a pipeline of business based on listening to the issues your customers
are facing.
–          How to motivate senior staff when there has been no salary increase or bonus for 2
–          The value of ‘competitor knowledge’ when building a robust business
–          Do I grow or do I stick?  – The fear factor.
–          Should the business employ more sales or more support staff, as a way of
increasing the size of the business?

The high value of the group advice was commented on by the majority of the members.

Please let us know by return if you would like us to reserve a place for you round the
table at our next meeting on the afternoon of 6 June 2011.

The numbers are limited to 15 and the groups are now getting full.

If you would like to attend, please contact Philip Drazen by email at:

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