Expanding Capabilities and Reducing Operating Costs in a Tough Market

It is impossible for all companies to be all things for all clients all the time. Many companies try, but these are usually businesses whose leadership tends to be a little controlling or fearful of the competition. In the end, this can result in resources being stretched too thin or costs being carried that are simply not necessary. In a tough economy this kind of business stance can be a death knell for a small business.

One way to maintain or expand your company’s capabilities while controlling costs is to outsource certain non-core functions. Another effective means is to identify “delivery partners” who have business lines or service offerings that are complimentary to your own.

When the number of companies out there spending money starts to get thin the companies with the most capabilities will often win the most contracts, so long as their price structure is under control. Adding a delivery partner will help your consulting or IT shop by giving it broader reach and set it up to penetrate deeper into your existing client base. In addition, you might find that it can have a significant impact on your overall “deal flow.”

In my company we look for delivery partners whose businesses not only provide complimentary services but whose target market looks a lot like our own. Everyone knows it is easier to approach a warm lead than a cold one. If you and your delivery partner can share client lists or at least collaborate on how to approach each other’s clients then you can increase your respective deal flows while shortening your respective sales cycles. This is a big deal in any market, but it can be crucial to survival during tough economic times.

One thing to be wary of is partnering with firms that feel they must have a piece of the profits from any deal that you do with their clients. My rule of thumb is that although I might be willing to pay a finder’s fee in some cases, the fact is that unless my partner is adding specific value to the deal they should step aside, as should I in the opposite case. Not stepping aside runs the risk of pricing the deal too aggressively and losing an opportunity for both you and your partner (not to mention leaving a bad taste in the mouth of an otherwise good client). The best approach is to bring your partner to your clients with the idea of helping your clients, not making additional money for you. A good partner will try to reciprocate if possible. It’s simply good corporate karma.

If you can’t find a delivery partner that you can trust, you should seriously consider outsourcing certain non-core functions. At the very least this will cost you less than having an FTE perform certain non-core functions. But it also might result in an improvement in your overall employee and customer services. For example, even if you have the utmost respect for your office manager and she is a wiz at QuickBooks, chances are she is just not as current on employment laws and practices or possess the same skills as an HR professional or CPA.

In addition, you might be able to outsource non-core client facing functions as well. There are ample opportunities to do this in the technology arena (from software development and hosting to SEO and email archival).Depending on the nature of your business you might find that you can employ a call center (onshore or offshore) to perform some of your basis phone based services. This way you can ramp up and down with the ebb and flow of your business without carrying extra headcount.

In the end, we all need to be more creative in a down market. Finding a way to outsource non-core functions or developing relationships that will help you grow or preserve your market share is simply good corporate practice. Why try to do everything yourself?