Businesses do what they’re best at and generate a profit based on the execution — experts commonly refer to this as a company’s core competencies. Organizations can create competitive advantages based on how prospective customers see these strengths and act upon them (by purchasing products or services).
But when organizations overstep their core competencies and try to do more, sometimes these non-central activities can obstruct business operations. These include necessary but minor tasks like statement printing (generating and delivering clear and concise financial correspondence), which get in the way of your priorities. But even if your business simply doesn’t have time to do these tasks, they still need to be done. So what should you do?
Outsource non-core tasks
When it comes to efficiency and effectiveness in the realm of business operations, a business needs to focus most on its specific money-making product or service. This ensures that the best practices in such areas are implemented. Therefore, outsourcing non-core activities allows companies to find specialists in those areas while concentrating their efforts on what they do best.
However, there is a major distinction between core and non-core activities, and businesses should never outsource their core activities, as they would lose control of their essence and reason for conducting business. Nevertheless, by keeping an activity that is not central to their identity in-house, they forfeit the ability to hire better resources for core tasks. In an activity like statement printing or accounts receivables, businesses without a complete internal accounting department may lose hours of effort to an activity that does not enhance or contribute to their competitive advantages.
How do businesses evaluate what to outsource?
Is your business an expert in managing computer servers? Is the revenue stream derived from that activity? And do your customers value this service when deciding to purchase from you? If this is not the case, then you probably don’t need to have a server that you manage directly. Instead, you should look for experts who understand how security and technology works. Otherwise, the company’s lack of maintenance or proper security protocols can create vulnerabilities which lead to security breaches.
Furthermore, if this was an in-house activity, imagine how many hours of energy would be devoted to trying to understand these processes which do not add directly to the company’s revenue stream. In cases such as this, the decision to outsource is easy. Based on your company’s expertise and focus, these high-tech tasks are better performed by third parties who specialize in that area. In other words, the revenue streams of those third parties come from providing those specific services.
Overall, a business has three types of processes. The most important are core tasks that contribute to the organization’s way of making money. No company should ever outsource these. The opposite is non-critical and non-core activities that do not contribute to profitability. Even if the company does not perform these well, the likelihood that poor performance will impact sales is low to non-existent.
In the middle of these two, however, are critical tasks that are not directly linked to the core competencies, but can negatively affect the company’s income if not performed well. The decision to outsource these depends greatly on the ability of the company to execute in this area. One prime example is accounting and accounts receivables. These are generally not core activities, but accounting can influence revenue. Specifically, managing accounts receivables poorly will lead to losses. Therefore, businesses are better served when relying on experts in statement printing and mailing services to ensure that their payables are managed efficiently.