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The 4 P’s of Outsourcing

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Time is limited. I get that. You’d have to be a wizard with some kind of time-turning device to personally check all the boxes on an entrepreneur’s to-do list. And even if you could, why would you want to? This is a business, not a contest. Your objective should be to build the leanest, meanest, sustainable organization possible.

But cash is also limited, especially during the pre-launch phase, before you’ve issued and collected on your first invoice. What entrepreneurs need is a methodology for organizing to-dos, and for determining which are must dos, which should be outsourced, and which could be done at a later date, or not at all. My 4P method does that.

You may have heard of the Four “P”s of marketing: Product, Price, Place, and Promotion. Given my bias for action, my four Ps are verbs, not nouns, and represent a four-step process for successful outsourcing: Planning, Picking, Phasing In/Out, and Partnering.

Step 1 – Planning

In the first step we outline the basic structures you will need in your business for it to be functional. This is unique to every business, but there are some basic areas that are common to all – invoicing, selling, taxes, accounting, etc. Begin this “Planning” phase by listing all the bases that need to be covered in your business, for example:

  • Prospecting
  • Selling
  • Invoicing
  • Collections
  • Accounting
  • Bookkeeping
  • Finances
  • Payroll
  • Procurement
  • Industrial Design
  • Product development
  • Code writing
  • Hiring
  • Training
  • Writing
  • Publishing
  • Marketing communications
  • Digital marketing
  • IT
  • Delivery/Logistics
  • Warehouse management

Your list will be unique for your company or industry. But you will know what to include because these are all things you’re going to have to deal with in YOUR business.

Step 2 – Picking

The next step is the fun one. Here you will put the above items in an EXCEL spreadsheet and “Pick” the jobs you want to do by putting your name next to them. You should base your decisions on the following criteria:

  • What do you do best?
  • What do you like to do?
  • What do you not like to do?
  • What could you pay someone else to do cheaper?
  • And, what else could you do, in a pinch, if you had to?

I included the last one in recognition of the fact that resources are limited and you may need to do certain things you may not want to do in the best interest of your company, until you have enough cash coming in to hand off to someone else. Assign ownership to these tasks using three distinct labels:

Step 3 – Phasing in/out

Megatons of thrust are required for a rocket to break free of Earth’s atmosphere. But once the rocket is in orbit, the fuel tanks and similar dead weight are cast off so that the rocket can maneuver more nimbly. Similarly, there are processes required at the launch of a business that are no longer necessary once the business is up and running. The third “P” pertains to “Phasing” tasks in and out, and could also reasonably be called “Pruning.” For this step, add two more columns to your spreadsheet. Label the first column, “6 months,” and the second, “1 year.”

In these columns you will demarcate items you plan to bring in house, consolidate with other activities, or eliminate because they are no longer necessary. This is a discipline that even some of the world’s biggest companies struggle to master, but it critical if you want your business to remain competitive.

Step 4 – Partnering

The fourth and final P is Partnering. This is where you identify strategic third-party relationships that will add measurable value to your business by:

  • Providing capabilities or services you would not otherwise be able to offer
  • Filling a critical skills or talent gap
  • Partnering with other small businesses to share the cost of non-core services and infrastructure
  • Sharing office space, administrative personnel, Internet access, and IT infrastructure, with other businesses.

This is, by no means, a comprehensive list. Your list will reflect the needs and profile of your business.

By using the four Ps, you can plan to do only those things you like, you´re good at, and to which you add value within the realm of your company. You can identify processes you’d like to bring in-house, consolidate, or eliminate, and look for ways to share costs and resources with others through strategic and value-added partnerships. And you can outsource within the limitations of cash flow and budget.