Monday, June 28, 2021

Why is it better for small business to outsource?

Better for whom? That is where we get skeptical and sometimes we feel we should not loose control of our business by outsourcing strategic parts of it. If you thing like that, I guess I should agree with you... actually that is one situation you should NOT outsource. I will devote another post to when you should not outsource, but now I want to talk about why you should.


Did you ever have heard about comparative advantage? This is the reason many countries open up their economies to free trade, in turn the comparative advantage is the reason they can improve their economies by trading with another country, actually this process also works on a individual level too. 


Look the picture above and answer me. Why anyone would work as a secretary making $25 per hour, while this person could be working as a lawyer making $150 per hour. It makes a lot of sense to hire a secretary for $25/hour and keep the difference ($125) while you are working as lawyer. Comparative advantage is not the same as absolute advantage. Lets say the lawyer person can better at being a lawyer and also being a secretary, even thou in this case this person has absolute advantage in both cases, she still can benefit to hire the secretary for obvious reasons (to keep $125/hour).

If you want a more detail explanation on the topic comparative advantage you check the following links:

Calculating Comparative Advantage ,
Comparative Advantage

From the last link we got the following insights:

  • Comparative advantage helps predict the patterns of trade between individuals and/or countries.
  • A country has a comparative advantage in the production of a good if the opportunity cost of producing that good is lower in that country.
  • Even if one country has an absolute advantage in all goods, it will still gain from trading with another country.
  • Although this example is cast in terms of countries, the same logic is also used to explain production patterns between two individuals.

Notice that this logic can be applied not only to countries, but also to individuals and businesses.

I did even made a video talking about one of the mistakes small business sometimes do is not hire help, in other words to outsource part of the business, so the business owner can spend more time doing what he does best (taking care of the CORE part of the business).

Some people do not feel up to the task and even don´t know how to start, that is the adventurous part of being a business owner, always learning something new, don´t forget that now a days is very easy to get information on how to do things for free, information that is very reliable if you know how to search for, for example, Michael R. Lewis a business advisor with more than 40 years of experience in business and finance co-authored this very nice article on "WikiHow" where you can find information, on how to outsource.

Many times outsourcing means supporting other business, that is because you would be hiring some other companies to do the service, and if you choose to do that with small business like you, not only with big corporations, you are sowing for a better future. It may mean you need to pay up a little bit more to hire from small business than big companies, but in the long run you are supporting a better market conditions than if was only dominated by the big companies. Rieva Lesonsky put a nice article arguing on this topic, it is worth reading.

Do you agree with my point of view ? if not, please feel free to share your opinion below. At least I hope, I did make you reflect on how you are managing your business.... 


Saturday, June 19, 2021

Confidence, marketing mistakes and people skills - Close the circle.

People skills is a very important skill in any area of your life (including business and personal relationships), many times you get to do business with people just because they like you. Don´t take this lightly, knowing what to do to be more likeable and confident is a great way to improve your chances for success. Finally the last gift is to understand what are the most common online marketing mistakes so that you can avoid them. By learning and applying those things, you will close a circle of improvement in your business.