[Business Solutions] Operation Outsourcing

Part of the American mystique is the entrepreneur who starts his own business, growing from just a truck and a dream to a thriving company. Such growth takes a lot of long days, hard work and, especially in the case of smaller companies, a boss who also is senior technician, chief mechanic, advertising manager, human resources director and accountant.

But as a company grows, certain aspects of the business can get too complicated or time consuming for one man with many hats to handle.

And while it sometimes may be difficult for a self-made business owner to stomach, outsourcing can provide companies with cheaper, more efficient services. Payroll, marketing and personnel — can be farmed out to firms that specialize in those areas, giving management more time to focus on its bottom line.

WHAT YOU BRING TO THE TABLE. Randy Nader, president and owner of Ponte Vedra Beach, Fla.-based Nader’s Pest Raiders, has used an outside firm to handle all of his advertising and marketing for nearly a decade. He said it just made sense to have someone else take care of his company’s advertising campaigns, which include radio, television and Yellow Pages.

“Because it saves me a lot of time; it helps with our image. I’ve got a professional doing it,” Nader said. “I don’t have to worry about it; I don’t have to have a person on staff to do it. We get bombarded (by people who want us to advertise). One thing I don’t want to do is advertise.”

Having one agency handle all the advertising brings everything under one umbrella, and ensures a consistent message for the five-county company. Nader’s agency — Jacksonville, Fla.-based Simons Media Services — created his logo, shoots all the commercials and handles public relations. Simons makes sure all the phone numbers are correct in ads, and monitors payments from a co-op Nader participates in with Dow AgroSciences and its Sentricon system.

Nader said both he and Simons each bring something to the table: He understands the pest control business and Simons understands advertising. Nader simply looks at his revenue streams, combined with the traditional spikes in pest activity throughout the year, and tells the ad agency when would be a good time to advertise.

COST (AND TIME) SAVINGS. “Number one, he knows the bug business, he doesn’t know advertising,” said John Simons, president and CEO of Simons Media Services about his relationship with Nader.

Simons said that if Nader wanted to buy the same ads that Simons is able to secure through his own connections in the industry, the PCO could wind up paying as much as 30 percent more for the same 30-second TV or radio ads.

And running a $6 million company brings a lot of people out of the woodwork asking for money. “Sometimes you will have as many as 15, 20, 30 different vendors asking you for your business. (Nader has) found he just can’t do that. It’s hard to ask them to leave,” Simons said.

Nader also uses a private company to handle his payroll, instead of paying one of his own employees to do it. Holiday, Fla.-based Southeast Payroll processes his company’s paychecks, handling all the deductions, taxes and worker’s compensation

“I save at least, at least 10 percent of payroll — well over a $100,000 a year,” Nader said.

PIECEMEAL AND PATCHWORK. Also in an attempt to save money, Arthur M. Katz, president of Knockout Pest Control, Uniondale, N.Y, said his company hired a private consultant — a “documentation specialist” — to write job descriptions for its customer service representatives. Katz said he hopes to drastically cut downtime for training new employees and reduce employee turnover, making his employees more productive sooner.

Katz said the current system — where technicians train new technicians and sales reps train new sales reps — can lead to a patchwork of skills that are passed along, and often company policy is doled out piecemeal, on an ad hoc basis. And, Katz said, management has little or no input into what topics are covered when.

“Employees are not trained to train, and don’t always do the same thing each time,” Katz said. The new manual will organize an employee’s duties, and codify the company’s expectations and policies on such things as truck maintenance, cell phone use or how to write up a sales call.

And with the advent of new technologies like PDAs, some technicians can become frustrated if they don’t understand how to use them. Knockout Pest Control introduced its PCOs to hand-held devices two years ago, and found that many had a difficult time transitioning to the new technology.

“Because it’s high technology, there’s a high frustration level,” Katz said. An employee’s frustration at not knowing how things work, or what’s expected of him can lead to high turnover.

“So when the new hire comes, they have the manual on how we want them to do this job. You can open a book, look it up and it’s all in writing,” said Katz, who estimates the savings in time and money to be in the thousands of dollars. And having a private contractor do it gives Katz more time to run the business.

“It cuts that training time down from weeks and months to days or hours,” he said.

FARM OUT YOUR PHONES. Making things more efficient is one of the main thrusts of outsourcing. TeleVox Software, based in Mobile, Ala., aims at saving technicians — and their bosses — more time during the day.

The company operates an automated call center to notify customers that they have an upcoming service call. This, in turn, helps eliminate missed appointments, reschedules and postponed treatments, said TeleVox’s  (www.televox.com) Marketing Manager Justin Everette.

The company works with home service businesses like pest controllers and utility companies, and also sends out welcome calls for new customers, customer satisfaction surveys and promotions to a database of existing customers.

“(PCOs) don’t have time to do it on their own, and it’s less expensive than having to hire someone to do that,” Everette said.

The author is assistant editor of PCT magazine.

When Outsourcing Goes Awry

Just like hiring a new employee, consultants and other companies interested in working to outsource parts of your business must be properly vetted and evaluated to make sure they’re a proper fit for both your company and for the project you’ll have them work on.

Just ask Russ Ives, president of Rose Pest Solutions.

A few years ago, Troy, Mich.-based Rose hired a consultant to study its marketing efforts, and ended up with what Ives called “project creep.”

“We started off on one kind of project and it kind of meshed into another one,” he said. “And we did get a product out of that. It wasn’t entirely bad; it wasn’t as necessarily helpful to us as we had hoped.”

The original goal, to improve sales and marketing strategies, called for gathering a lot of information from the company’s client base and its prospective clients to see how well it was reaching its current and potential customers.

Instead, Ives said, the company was handed a document that suggested the company bring more of a “team approach” to its management style.

And while the company did end up implementing some of the consultant’s suggestions — with some modifications — Ives said the project ultimately failed because the consultant did not have all the necessary skills to complete it.

“I think he overstated his particular expertise in that area. While he, I think, followed through on the things that he said he would, I’m not sure he brought a lot more expertise to it than I did,” said Ives, who has an MBA. “It just turned out to be something a little different from our perceived need.”

He said Rose does not outsource any of its operations. When it does hire consultants, he said, the company will “test drive” them on a less-expensive or less-important project.

“One of the challenges is making sure you have enough information.

Sometimes that’s hard to come by,” Ives said. “I suppose part of it comes down to making sure you effectively evaluate the credentials and capabilities of those that you’re working with.”

But even after a less-than-satisfactory experience with outsourcing, Ives said the idea behind the practice is a sound one.

“He did bring a willingness or discipline” to the project that Ives said he, as head of the company, just didn’t have time to muster. “Sometimes getting somebody to do it takes the onus off you.”

Advice on outsourcing parts of your business

Once you find a freelancer whom you’re comfortable working with, and whom you trust, remember these tips:

• Maintain a close working relationship with consultants who work outside your office.
• Meet regularly to stay apprised of their progress on projects.
• Make sure you define clearly what you expect from a consultant at the end of a project.
• Establish early on how you will be billed. Different types of work, and different people at an agency, are paid differently.