Tag Archive for 'Efficiency'

Seeking efficiencies

Biutou Doumbia lives in a tiny village in the West African country of Mali. Biutou (sounds like Bee-oo-too) and her family live in poverty, very close to the line between survival and, well, you know.

Oh, one more thing: Biutou is a small business owner. She makes and sells peanut butter.

In Mali, peanut butter is made the same way African women have made other staples for millennia: by grinding the seeds on a rock with a large wooden pestle.

You might say that Biutou’s operation is vertically integrated: She grows the peanuts, and then manufactures, sells, and distributes her product.

Over two centuries ago, in The Wealth Of Nations, Adam Smith explained how markets are made by the division of labor. And free markets created capitalism, which Ayn Rand called, “the only system geared to the life of a rational being.”

Biutou doesn’t know Smith or Rand from a warthog - she’s illiterate. But she is one of Rand’s rational beings. And as such, she recognized the efficiencies of division of labor when a diesel-powered grinder/blender was made available.

Now, for 25¢ and a 10-minute wait, Biutou’s 15 pounds of peanuts turn into better peanut butter than she could make pounding all day with a pestle.

One of the things every business must do today is focus on core competencies–what you do that makes your business valuable to customers. Everything else, theoretically, can be outsourced to specialists in your non-core activity.

Take a look at your own operation to see how you can find efficiencies by asking this question: Must this task be done in-house?

Your answer will be found in the answers to other questions like these:

1. How much control do we lose, and can we live with it?

2. What impact will our decision have on customers?

Remember, any decision to outsource–or not–should be driven by the desire to seek efficiencies and improve customer service.

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SBA Poll: Are you outsourcing?

The Question:
How much outsourcing of tasks (payroll, accounting, web development, etc.) do you do?

24% - We outsource anything we can that isn’t our core competency.

39% - We do some outsourcing and expect to do more.

17% - We haven’t done any outsourcing but probably should.

20% - We don’t outsource and don’t plan to.

My Comments:
One of the most powerful and important small business management practices of the past generation is outsourcing: contracting with another person or company to perform certain tasks your business needs but is not good at. You should focus on your core competencies - usually whatever touches customers - and let someone else perform the non-core competency tasks.

As you can see from our responses to this week’s online poll, 63% are doing at least some outsourcing. I’m extremely pleased to see these numbers, but more than one-third are still MIA as outsourcers. This will change in time.

I’ll have more to say about outsourcing in an upcoming Feature Article, including the difference between internal and external outsourcing. Stay tuned and thanks for participating.

During a recent segment on The Small Business Advocate® Show I explain how outsourcing could help make you business run more efficiently. Click the link below to listen.

Use outsourcing to get that last drop of operating efficiency

Check out more of Jim’s great content HERE!

Take this week’s poll HERE!

Watch Jim’s videos HERE!




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