Every founder has been there.
You’ve successfully built a practice, grown a team, and are now in the classic rut – you’re busier than you’ve ever been, with no clear path to scaling your firm. Although handling day-to-day tasks for a bustling office feels like you’ve unlocked a new level of success, you’ll quickly realize that you can’t work on your business if you’re working in your business 24/7.
Over time, even if you manage to keep your head above water, you’re likely to hit a few major roadblocks:
- Your staff is resistant to change. This could be true for a number of reasons: they’re at capacity and don’t have room to spearhead new initiatives, they’re comfortable using existing systems and processes, or they’re burnt out and unwilling to innovate or adapt to new approaches.
- You don’t have leadership capacity on your team. You may have a rock-solid team that is maintaining your existing firm and even keeping up with new business coming in, but that doesn’t mean they have the availability to lead new initiatives or think outside the box.
- You’re going to run into stagnation. The initiatives that have helped you grow your firm to this level won’t necessarily work to get you to the next level. Without more margin in your schedule, there’s no feasible way to keep up with technology trends or to identify creative solutions to problems you’re facing.
- You’re faced with upcoming changes but no way to make transitions smoothly. Whether you’re hiring new leadership, planning to phase out of the day-to-day as the founder, or planning to pivot your service model, you won’t be able to execute your vision without help if you and your team are drowning in work.
This is where outsourcing comes into play.
Outsourcing is simple in theory: you delegate work that your team either doesn’t have time for or isn’t specialized enough to do. Whether that’s a freelancer or a service provider, the goal is to get help where you need it without adding another full-time employee to the payroll.
Unfortunately, successfully outsourcing a portion of your business or strategic growth can be more complicated than it seems. Not all outsourcing opportunities are created equally, and many founders wind up paying exorbitant fees for outsourced services that don’t move the needle.
One way to avoid this trap is to consider what type of outsourcing you need – strategic or tactical.
What is Tactical Outsourcing?
Tactical outsourcing focuses on repetitive, operational tasks that keep the business running smoothly. Basically, the get-it-done tasks that don’t stop just because you’re busy. Often, this type of outsourcing might be:
- Social media management or marketing administration (marketing assistant or freelancer).
- Account paperwork and data entry (virtual assistant).
- Compliance tasks and audits (outsourced compliance).
- Bookkeeping and payroll (bookkeeper or Fractional CFO).
- Building financial plans based on advisor input (virtual paraplanner).
Why Does Tactical Outsourcing Matter?
Tactical outsourcing is an excellent fit for firms that must fill daily work gaps. It could be a long-term fit if you don’t want to bring tasks in-house, or it might be something you only need to leverage for a season to get you to your next level of growth.
This type of outsourcing empowers your team to focus on what matters most. You can outsource low-priority or low-revenue activities and projects to empower full-time employees to set their sights on bigger goals.
Many firms leverage tactical outsourcing to prolong full-time hiring needs. Hiring full-time team members is both time-consuming and expensive. Tactical outsourcing can help you skip the expense of recruiters, posting job ads, sifting through resumes, interviewing, and training your new hire. Vendors have tried-and-true processes and know how to plug right into your firm. You still need to vet them, but you skip the hassle of hiring and onboarding from scratch.
What is Strategic Outsourcing?
Strategic outsourcing focuses on higher-level, growth-oriented initiatives that require specialized expertise. If your firm focuses resources on strategic outsourcing, you’re working with specialists to help you build and execute a road map to get you from where you are now to where you want to be. You may not see results immediately, but you’re investing in your firm’s future.
Examples of this type of outsourcing might include:
- Working with a specialist to help you redefine your accountability chart and restructure your servicing teams.
- Driving new revenue strategies with a business development consultant.
- Improving operational efficiency with a technology strategist.
- Building brand visibility and new client pipelines with a marketing expert.
- Setting up long-term regulatory frameworks with an outsourced compliance leadership team.
- Elevating service models and client engagement with an operations expert.
Why Does Strategic Outsourcing Matter?
Strategic outsourcing is unique. It provides access to expertise that you wouldn’t necessarily have in-house and exposes you to new ideas and creative thinking. Because of this, strategic outsourcing is often a critical accelerant for growth and innovation in firms that are currently at capacity. By bringing in a strategic partner, you can get a fresh perspective and find new ways to scale and modernize your firm.
By partnering with a strategic consultant, you can also:
- Support leadership transitions
- Build a solid operational foundation for future success
- Collaborate with your team members (and train them!)
- Work with a non-biased third party to find solutions for your firm
What Type of Outsourcing Do You Need?
The truth is that both strategic and tactical outsourcing are often critical for busy firm owners for different reasons. It pays to ask:
Do I need help with day-to-day tasks, or am I looking for support with innovation and growth?
If you’re underwater in the day-to-day execution of your business, tactical outsourcing may help ease the burden on you and your team and free up the necessary creative space to thrive. If you are burnt out or unable to strategically plan for your business in this season, but know you want to grow, strategic outsourcing may be your best bet.
You may find that you need a combination of outsourcing solutions to help you grow the firm you envision. With the right strategic partner, you may find that some tactical delegation evolves to become strategic outsourcing over time and as they get to know your business.
As you’re trying to decide which route to go, ask yourself:
Why now?
Knowing what’s motivating you to seek outsourced support can help you to:
- Set clear goals for your outsourced partnership.
- Clarify what “success” looks like for you and your firm within the outsourced engagement.
- Determine who on your team will benefit from outsourced support – and whether they have capacity to manage the project alongside you.
- Define budget constraints. You may want strategic outsourcing but need to make do with tactical delegation until you grow your budget to work with the expert you’re aligned with.
How to Ensure a Successful Outsourcing Experience
At one point or another, all business owners have worked with an outsourced partner and had less-than-stellar results. This happens for several reasons, but the primary cause is unclear expectations and goals. Before partnering with a provider, make sure that you define success and agree on key milestones. Ensure that timelines and deliverables are communicated so that there are no surprises.
Beyond setting initial expectations and regularly checking in to make sure they’re being met, there are a few additional ways to set yourself up for success when outsourcing:
- Communicate. Communicate regularly and provide feedback often to make sure things stay on track.
- Go slow. Don’t tackle everything at once – implement new processes or deliverables in phases both for your own sanity and so that your team can adjust. This also gives you time to beta-test any critical changes on the road to implementation.
- Don’t fully delegate your outsourcing to the team. Get leadership involved in both setting the vision for each project and monitoring ongoing progress.
- Regularly adapt. No outsourcing engagement is seamless, and it’s likely your project will evolve over time (especially if you’re partnering with a provider in an ongoing capacity). Make sure to check in and adapt as needed, tracking outcomes and measurable results as your guide posts.
A Word to the Wise
Outsourcing can be an incredible catalyst to buy back time, resources, and to grow and develop a more efficient firm for the long-term. However, that’s not to say the outsourcing journey has no pitfalls. In general, I like to follow a few rules when it comes to advisor outsourcing:
- Be choosy about what you outsource. Ideally, you can avoid outsourcing time-sensitive or client-facing tasks to ensure that miscommunication and degrading deliverable quality don’t derail your firm’s success or reputation.
- Be consistent. Ensure that you and your team consistently communicate with your providers to drive maximum value.
- Hit pause when necessary. Don’t hesitate to part ways or pause an outsourcing arrangement when business demands make it challenging to stay committed. The #1 reason firms struggle to get value from outsourcing is that they hit consultant fatigue and struggle to adopt outsourced processes or keep up with deliverables from their provider. If you hit this stage, ask to pause the engagement and use this break to reset and re-evaluate a more sustainable long-term solution that aligns with your goals.
Need Help?
As advisors navigate their outsourcing journey, understanding these two key approaches to outsourcing can help create a more efficient and scalable practice. Whether you’re considering tactical outsourcing to streamline back-office tasks or strategic outsourcing to enhance your service offerings, the right partnership can transform your business.
At Level Best, we specialize in helping advisory firms make informed operations decisions that align with their growth objectives. If you have questions about implementing either type of outsourcing in your practice, our team is here to help guide you through the process. Reach out to learn how we can support your firm’s evolution.
