There was an interesting discussion in the Blog Mastermind forums that began with a question about when you should start outsourcing.
The impression this particular student had was that outsourcing is the key for success, and it is something that I emphasize over and over again inside Blog Mastermind. The problem in this case was the lack of cash flow to pay for outsourcing and whether it is worth going into debt to pay for help if it is indeed that important.
I was quick to explain that outsourcing is important and it’s worth paying a few hundred dollars to get your blog set up with a nice theme, a domain name and get a few key plug-ins installed for you if you can’t do it yourself, but beyond that you don’t really want to start using credit to pay for outsourcing.
What Do You Do When You Have No Money?
I explained that during my early days, when I didn’t have much money to throw around without being absolutely sure there would be a return to make it worthwhile, I did most things by myself.
I actually got a little carried away with how tight I was with money, meaning my growth curve was ridiculously slow and I was very frustrated many times as I struggled to get off the ground. I can’t remember how many times I walked around Brisbane wondering if I should just throw it all in and do something else.
If you look at some of the first year posts at this blog you might even notice in the tone of my writing and the topics I covered that I wasn’t always sure of my direction.
I did eventually establish enough cash flow that I finally felt comfortable enough to bring on help, but it was long overdue by then. I would never have considered going into debt in order to pay for help, however that shouldn’t be looked at as the answer for all situations, that was only a representation of where I was at with my mindset at the time.
When Do You Seek Investors?
People seek investors all the time, both for financial support and strategic guidance. Often the money is spent hiring help in order to expand the business. This is an option for any person starting an Internet business too, but it’s rare for a person with a blog or focusing on affiliate marketing or other low-entry cost online businesses to consider investors as part of their plan.
Most bloggers or individuals looking to make a living from the Internet want simple solutions. They don’t have plans for creating a multi-million dollar enterprise, with staff and offices. They want a nice small business they can run independently, travel with, earn enough to live comfortably and choose when they work. Taking on investors in this case serves to complicate the process, and is rarely considered by any but the very ambitious.
If you are not going to sell a share of your business to investors to free up some funds to outsource, how can you establish the cash flow necessary to grow your business? Well, that’s a good question, but it’s the wrong question at this time. This is what you need to ask yourself next…
What Do You Need To Outsource First?
The first question you need to ask yourself is what exactly are you going to outsource as your immediate priority?
It’s amazing how many people realize that outsourcing is important yet haven’t taken a look at what they actually need to get done to eliminate their most pressing constraint, and what parts of the process necessary to get that job done can be outsourced.
Internet businesses contain all kinds of parts, most of which can be handled by other people, however handing them over to others all at once won’t achieve your goal, you will just make yourself broke from all the fees you have to pay your outsourcers.
Projects develop in a sequence, like a house constructed from the ground up on a budget, you build the foundation long before you head out and buy furniture to keep costs at any one point in time as low as possible.
What Are Your Goals?
When considering what to outsource first you need to look at your goals from two levels –
- What does this project need to do for my business NOW? (In other words, are you focusing on the right objectives for what your business needs today?)
- What components are required to take the next step towards completing this particular project?
As an example, right now I’m planning a product I’m going to release at the start of 2009. It’s my coaching program called Membership Site Mastermind, a program to teach people how to launch a membership site using your blog as a launchpad, which has been running in BETA during 2008.
The project is a fairly significant product release for me in 2009 and something I’ve already poured many hours of my time into. The purpose, in terms of what this project will do for my business, is to expand my sales funnel, secure another source of cash flow, increase my customer base and further establish my presence in the Internet marketing industry. This is a list of some of the objectives of this project for my business – I’m not trying to sell it to you, so I’m not talking about the benefits of the product for potential customers, which would be a completely different list of characteristics.
This project makes sense for me to focus on it because I’ve built a foundation where I’m in a position to release it. I have the cash flow, the time and the expertise to create this product and make it a success. In your case you need to choose your projects based on business goals that make sense to you and your present situation.
For people just starting a business, the very first projects are focused almost entirely on establishing cash flow. Cash flow is the blood of your business, granting freedoms critical for success.
You can quit your job with cash flow. You can make outsourcing decisions that require you take on more risk with cash flow, which when successful, usually result in the greatest increases to your business bottom line (with greater risk comes greater reward). You can also enjoy many personal life freedoms thanks to cash flow (how about not worrying about where the money will come from next time you plan a trip overseas?).
I should also note that your ambition factors in here as those with lofty goals tend to shoot for loftier outcomes, but I’ll leave it up to you to decide how big you want to become and what you want to work towards in your immediate future.
Break Down The Components To Find Constraints
Once you know the project you are working on, you can look at the components that go into that project and decide what needs to be done immediately in order take the next step towards completing the project.
For those new entrepreneurs reading this, your first goal could be to create a blog that generates $3,000 a month and part of that process (certainly an early part!) is to install WordPress with a partially customized theme, which is what you can outsource first. That’s a fairly straight forward outsourcing process.
Unfortunately most situations are not that black and white. Often you need to take a look at what you are currently doing and how that is stopping you from doing what you should be doing, and then take steps so you can stop working on the activities that are not moving you forward (stop treading water and start swimming forward activities).
I find it effective to review what I do during a working day, given normal conditions (I’m not catching a train or plane or attending an event) and consider how much of my output was relevant to finishing a project. During my pre-outsourcing days, I would spend whole days just dealing with emails and tweaking elements of my website design, which would not take me a single step forward. I had to remove these two tasks from sucking my time in order to be able to focus on completing tasks for new projects.
For those of you still working full time, you can’t do much about the time you spend at your day job, so unless you are prepared to quit or reduce the amount of time your job takes from your life (perhaps take a pay cut and work three days a week?), it’s what you do during other hours where you can look at how you use your time and where outsourcing may help (it’s not likely your boss will let you outsource your job tasks unfortunately!).
Don’t forget outsourcing can help with your personal life too to create time to work on projects that move your business forward. You can hire people to help mind your kids, or clean your house or plan holidays or parties for you. If these are changes you can make right now to help move your business forward, they should be listed as things to outsource in your immediate future.
With the clarity that hopefully comes from reviewing your present typical working day and your entire life if necessary, you will begin to see tasks that need to be outsourced immediately. This might be outsourcing simple technical tasks like installing blog plug-ins, to critical activities like locating a person to write the copy for your sales page or set up the system to manage your membership site, or any manner of things in your personal life.
From there you need to take action, begin the outsourcing process and use the freedom it generates to devote more time to those moving forward activities so you can create more cash flow to hire more people to help you expand to the point you have met your goal.
You Need Cash Flow
Now is the time to start asking that question that came up earlier in this article about how to establish cash flow so you can pay for outsourcing.
It’s important though that you don’t just think about making money when you consider outsourcing, you must see how the outsourcing fits into the project you are working on now and how that project impacts your overall business progression. This is why I asked you why you want to outsource before even talking about earning the money to pay for it.
Outsourcing and cash flow are closely related. One generally helps to create the other and vice versa (you can pay money to hire contractors and you can use contractors to help you make more money), but until you have that very first income stream the decision to outsources can be a scary one.
As I stated at the start of this article, you don’t want to go into debt to pay for outsourcing unless you know for sure the return is there once your outsourcers finish the job. For most of you outsourcing is something you enter very cautiously because the money you spend today is not going to replaced tomorrow by cash flow generated by your already established income streams.
Coming Up – How To Pay For Your First Contractor
In my next article, part two of this series on outsourcing, I’ll explain how I balanced my cash needs, including paying for every day life things like rent, food and leisure, as well as investing in the growth of my business, albeit very cautiously, with money that I wasn’t sure would come back to me after spending it.
I hope after reading this article you realize that there is a strategy behind each outsourcing decision and it’s a smart idea to clearly understand why you are outsourcing before you do so. This is especially true for those of you without any income streams beyond your job right now, who face a situation where each decision to spend money on your business takes away money you might be spending on your family and personal life.
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Outsourcing my outsourcing