Strategic Relations Journal

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Issue #68 -- January 20, 2003

In today's lesson, you will learn how to trim the fat by outsourcing useful but non-competency specific tasks to reduce your costs. In "Ways to Reduce Costs by Outsourcing Non-Competency Areas," you will see partnerships in action. Utilizing strong partners that free your most essential people's time is good business and a great way to use business relationships to your advantage.

It is important to take last weeks lesson to heart, because if you start replacing them with lower cost partners, or even add new staff during a salary freeze, you better have a good reason. Take the core of last weeks message to build employee morale before you start reducing costs, it will leave your company better for the change.

I am interested in learning more about your challenges in business relationships. Take a moment to write me to share your opinion on this topic, and help me tailor lessons around your own needs. What is your biggest business relationship problem right now? Write feedback-strategic-relations -- your advice is also welcome.

Stay tuned to learn about more strategies for key account management in recessionary times. Discover how to keep key customers when the fears of bad news cloud their judgment. This lesson is one you cannot afford to miss. Until then, I am wishing you all the best.


Justin Hitt
Consultant, Author & Speaker

Ways to Reduce Costs by Outsourcing Non-Competency Areas

By Justin Hitt, Strategic Relations Consultant,

What can you do with those routine areas of your business that do not contribute to your competitive advantage? Often the overhead burdens of a company are the only things keeping them from profitability. Outsourcing can be a way to enhance your core competencies and create more time to spend with customers.

Some say you should out source everything that is not 100% essential to your core business. In actuality, it is not necessary that you out source everything as much as what you do out source those things that do not contribute to income. There are many reasons to out source all nonessentials, including:

Other reasons to out source are more industry specific, but these reasons serve as a good foundation to understanding. Let someone else take care of those things not specifically benefiting your competitive advantage. The key is to spend more time with customers doing what you do best.

When deciding what to out source look at parts of your business which are generic and common to all other businesses regardless of industry. Look first at overhead activities that do not interface directly with customers, and require little industry specific knowledge. The best areas for outsourcing are those that increase the productivity of those who generate income for the company.

You will find some areas more easily outsourced than others are.commonly outsourced non-core functions are:

These areas are commonly outsourced because they require very little specialized knowledge about your business. They represent lower wage jobs that can free up the time of higher waged employees. Proficiency in these areas also reduces the amount of time necessary to do these tasks, which speeds up your implementation.

Outsourcing Frees Up Resources

A skilled secretary can free up 10 hours a week per executive supported (up to 4) in "paperwork time" with little or no extra effort on the executives part. Do you think at least half those hours could be put back into other tasks that no one but the executive can perform? In most businesses, the answer is resounding "yes."

While virtually anything can be outsourced, start in areas that free up the time of money earners. This reduces your costs while increasing your income. This strategy becomes a double win for your business with little or no investment.

Outsourcing does increase your managerial burden and does not always have a positive effect on your bottom line. You will have to manage the outsourcing service contracts, as well as interface with the resources they provide. Ideally, the benefits gained in time and reductions in labor costs; outweigh the small effort required on the part of managers. When properly implemented the cost of outsourcing is most often less than having your own employees when assessed over an extended period.

Depending on those things that make your business unique, you can out source various activities. Here are a few real life examples:

Not every part of your company can be outsourced. Most companies would not want to out source their sales force or customer service center, unless those providers were highly specialized in your industry and extremely knowledgeable about your company. Even relatively small companies can provide big results for their customers with standing outsourcing arrangements with strategic partners.

Even though outside people are performing these internal tasks, you do not lose control of the results produced. A well-structured contract should outline expectations and measures of performance. You may even benefit when you hire minority companies depending on programs your government has available.

With outsourcing your non-core areas, you can take advantage of highly specialized people without investing in their continual training, healthcare costs, insurance coverage, and other issues common with having your own employees. By freeing up your highly skilled billable staff, you can earn more income and spend more time with your customers.

Where can you free up resources to spend more time your customers?

© 2003 Justin Hitt, All rights reserved.
/ relationship-realms | profitable-customers /

Justin Hitt is a strategic relations consultant and the author of "How to Get more Profits by Cultivating Your Best Customers". Clients include business owners and executives of medium to large companies worldwide. He can be reached at

Questions & Answers

Can you afford NOT to take advantage of this free consultation by email? Ask your strategic relations questions; send questions to questions-strategic-relations


>> Easy Come, Easy Go. Pre-scheduling Discount No Longer Available. Thank you to all those who responded to the beginning of the year, pre-scheduling promotion announced in the last issue of Inside Strategic Relations. I will not have to do as much marketing this year, and hope to pass those savings along to you. You can still pre-schedule consulting time or take advantage of my retainer programs, but you will not get additional discounts beyond the coupon in the subscribers’ area.

>> Today's newsletter is a bit late today, If only I started earlier. A client called at 10am today about being in town tomorrow. They wanted to meet with key defense contracting players around the Patuxent River (MD) area. With less than 24 hours notice, I need to arrange some heavy hitters for this clients visit a success. Do you ever get client requests that seem impossible to fill?

The client had to be in the area anyway and wanted to add a few extra stops to fill out the rest of the day. I was amazed how quickly I was able to get people together. It took about 15 minutes to go through my customer relationship management (CRM) software to identify those most likely to benefit from a visit, their relevance to my clients’ services, and local availability. For another 20-minutes I sent email inquiries to see who was available, and made a few phone calls.

With today being a Federal holiday (in the United States it’s Martin Luther King’s birthday) I was not expecting to get a hold of anyone, but I managed to arrange three meetings by 4pm. Looks like my clients going to have a great visit tomorrow, but I will be sure to explain how much better results could be with advanced notice. I think it was my relationships, developed over the years, which made this possible on short notice.

When clients expect something “next day,” which usually takes weeks to arrange, be sure to do your best, but let them know they could get better results if they provided more notice. Also, when you leverage relationships, make sure it is of benefit to all involved; otherwise, the last minute arrangement could backfire. Seek win-win, deliver for both parties and they will invite you back.

If you have a strategic relations request, please give me at least two weeks and I can put you in touch with virtually anyone. I had always wanted to meet Donald Trump and used the same methods to arrange a 5-minute conversation in Washington, DC (USA) during a conference he was attending.

The conversation was not anything more than more about his business ventures when he was my age. I did not have any business objectives, but I wanted to meet the man who could lift him self up from business failure to overcome adversity. Through the process, I did establish several contacts with several of his close associates who I still communicate with today.

Through my network, I put a client together with Madeline Albright while she was US Secretary of State. While I am not going to put you in touch with sports athletes or famous people for autographs (though the Madeline Albright meeting got my client a signed picture.) If it is for business, and you can sincerely provide benefit to the person you want to contact, I can make it happen. Creating relationships is one of the things I teach, and that is what I do for clients.

I put out a challenge to you. I can arrange at least a 5-minute introduction with any business leader on Mid-Atlantic coast of the United States within two weeks, or any business leader in the world in a month. It will only cost you my time and related direct expenses if a meeting is confirmed (a deposit on contract, the remaining after the meeting.) To whom would you like to meet and do business?

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