TFC #15: Should I Outsource?

Benjamin Birch owned a small woodworking shop and took great pride in crafting custom cabinets from start to finish. He believed that by doing everything himself, he could control the quality and maximize his profits. However, as his business grew, Benjamin found himself buried in work and struggling to keep up with the demand.

One day, a friend suggested that Benjamin consider outsourcing some of his work to other companies that specialized in areas such as doors, drawer boxes, and custom hoods. At first, Benjamin was skeptical. He thought that outsourcing would mean giving up control and potentially compromising the quality of his work.

But as the workload continued to pile up, Benjamin realized that he needed to make a change. He decided to try outsourcing a few upcoming projects to another company. To his surprise, he found that outsourcing actually increased his efficiency and allowed him to focus on the parts of the process that he enjoyed and was good at.

As a result, Benjamin was able to take on more projects, increase his revenue, and improve the quality of his work. He also found that he had more time to spend with his family and pursue his other interests.

Looking back, Benjamin realized that his initial reluctance to outsource was rooted in fear and a belief that he needed to do everything himself to be successful. But in reality, outsourcing was the key to unlocking his business's full potential and allowing him to thrive in a competitive market.

From that day forward, Benjamin continued to outsource parts of his work and never looked back.

**End of fictional story

If you want to take your business to the next level, sometimes you have to let go of the reins.

Pros of Outsourcing:

For some shops, outsourcing parts of their production process can allow them to build more boxes and increase their profits.

Outsourcing is not a sign of weakness, but a strategic move that can help your business stay ahead of the curve and achieve sustainable growth.

Here are a couple of reasons to consider outsourcing:

Cost Savings:

This can seem backward at first. It’s easy to believe that we make more money when we do everything in-house but that isn’t necessarily always the case.

Outsourcing certain tasks can be more cost-effective than doing them in-house, particularly for tasks that require specialized expertise or equipment. This can help businesses save money on labor, equipment, and overhead costs.

Greater Efficiency:

Outsourcing certain tasks can help businesses operate more efficiently by freeing up time and resources that can be devoted to other critical activities.

For example, outsourcing finishing or drawer boxes can help cabinet makers focus on other critical areas, which can help them complete projects more quickly and efficiently.

Scalability:

Outsourcing certain tasks can help businesses scale up or down more quickly and efficiently to respond to changes in demand or other business needs.

This can be particularly valuable for small businesses that may not have the resources or expertise to handle sudden changes in workload or market conditions.

Cons of Outsourcing:

Outsourcing work isn’t for everyone.

Here are a few reasons you might want to avoid outsourcing your work:

Quality Control

When businesses outsource certain tasks, they lose some control over the quality of the final product. This can be a big deal if your marketing and messaging is all about quality custom cabinets.

If you outsource, you need to focus on finding reputable companies that will not sacrifice the quality you need.

Hidden Costs

Outsourcing certain tasks can sometimes come with hidden costs, such as fees for rush orders, unexpected shipping costs, or additional charges for revisions or changes to the original order.

These costs can add up quickly and erode any potential cost savings from outsourcing.

Dependency on Partners

Businesses that outsource certain tasks can become overly dependent on their outsourcing partners, which can create vulnerabilities and risks for the business.

For example, if a key outsourcing partner experiences a production delay or quality issue, it could cause significant disruptions to the business's operations and reputation.

Conclusion

Several of the shops that I work with are very set on the idea that they need to produce everything in-house.

I do agree in some cases. If your shop has the equipment and the skillset to do the job, by all means, go for it. You can absolutely make great money by doing everything.

However, some people do everything themselves simply because they haven’t considered the fact that it might be costing them more money by doing it in-house.

Consider this:

You probably won’t be able to build drawers as quickly and efficiently as someone who is specializing in drawers.

You probably won’t be able to build doors as accurately and efficiently as a door shop with specialized machinery.

Thanks for reading!

Myron

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