When to Outsource - Caleb Jones

One of the most common questions I get regarding new Alpha 2.0 businesses is when to start hiring virtual assistants to outsource your work. 

Outsourcing is critical because one of the requirements of an Alpha 2.0 business is that it should not require more than 30 hours per week to maintain. You must remove yourself from the flow of work so that you can focus only on those 1-3 core IW (Improvement Work) areas that actually make money and increase revenue for your company 

Most of the things you do in your business is SW (Standard Work) rather than IW. SW is required, and it must be done, but it doesn’t ever increase your income. Examples of SW would be customer service, checking email, and working on the technical aspects of your websites.  

Your goal is to outsource as much (if not all!) SW as soon as you possibly can so you can focus on IW. IW actually increases your income. Examples of IW include marketing, product development, building strategic alliances with other businesses, optimizing your business to eliminate expenses, and so on. You won’t be able to do much of this stuff if you’re focusing on SW all the time. SW is for your staff to do. They’re probably better at it than you anyway. 

Most normal (non-Alpha 2.0) business owners spend the vast majority of their time in SW because they insist on doing everything themselves. They use excuses like: 

  • “This can’t be outsourced. I’m the only person who can do it.” 
  • “People won’t do it as good as I can.” 
  • “I tried having someone else do it once and he screwed it up.” 
  • “Managing people is too much trouble.”
  • “I don’t trust anyone with my passwords/client data/access to my social media/etc.” 
  • “Having a staff will cut into my profitability.” 

All of these excuses, and those like them are complete horseshit. Not only are they usually factually wrong, but in most cases they’re the opposite of the truth. You must outsource most of the functions of your business once you can afford to do so. Failure to do these dooms you to the fate of the typical small business owner working long hours for the rest of your life for an income that never really grows. (Hell, if that’s what you want, you almost might as well go get a corporate job.) 

When to Outsource? 

So, if you have to outsource, the only question left is when to do so. On one hand, you need to outsource as soon as you possibly can. On the other hand, you don’t want to spend money when you’re not making very much (always a dumb idea), nor do I like advising guys to start spending a bunch of money on an unproven business. 

My general rule of thumb is to wait until you are making around $2500 per month (or the equivalent, adjust if you live outside of the US) in pretax net profit at least three months in a row before you start outsourcing hardcore. This $2500 figure isn’t exact; there might be times it makes sense to do so at around $1800 or $3000. 

You should not be hiring people in your business if you’re only making $600 or $900 a month. Instead you should conserve your cash and focus on marketing so you can get your income a little higher. Once you’re making around $2500 a month, you’ve entered into a new phase where you can justify hiring people to help you. 

There are two exceptions to this. 

The first is when you have a single, one-off project that needs to be done and it makes more sense to hire someone rather than doing it yourself. For example, your business requires you to set up a website that is more complicated than a basic few pages that you could easily do yourself. Instead of investing three months into research, trial and error figuring out how to do this, it might make more sense to bite the bullet and pay someone $600 (or whatever) to get it done right in about two weeks or less. (Again though, this is an exception. Most new Alpha 2.0 compatible business will never require something this complicated at the outset.) Another example would be setting up a logo or graphics if you have no artistic ability. 

A second exception is if you are already wealthy, and/or already a successful business owner, and/or are working on your second or third successful Alpha 2.0 business. In that case, you not only have money to spend but you probably already know what you’re doing; the money you’re spending isn’t actually a risk. If you’ve already built several profitable companies and have a track record of making money this way, then of course there’s no problem with you hiring your entire staff up-front if you really want to. 

However, if this is your first business and you’re the typical guy with not a lot of money to spend, you should start off doing everything yourself. Hit the marketing as hard as you can, get your monthly income up to around $2500, then start hiring.  

What’s the first thing you should outsource? That’s easy. The biggest piece of SW that takes the most of your time. Every business is different in this area so I can’t tell you what that will be. For some businesses it will be technical work (managing/building apps or websites and so on). For other businesses it will be managing all the incoming customer service emails and phone calls. For other businesses it will be financial work. It really depends on the specific business. 

Once you’re ready to start hiring regular virtual assistants, you should do a time audit and figure out where you’re spending most of your SW time or the SW time that you’re really bad at or absolutely hate. That should be the first thing you outsource. 

Then, over time, keep outsourcing, over and over again. For many years I would audit myself at least once every 18 months to find new things I could outsource so I could focus on IW. (Today I have an entire staff who does almost all of my SW, but I own some mature companies.) 

Once you have SW handled, you can then start outsourcing IW as well. That’s when things get really fun; hiring a staff that actually makes you money. This is one of those few times you enjoy the expense of paying your staff because the more you pay them the more money you’re probably making. 

Outsourcing is a big topic and I will publish future articles about it. Just make sure you do it as fast as you can, but not too soon. 

5 Comments on “When to Outsource

  1. Excellent advice.

    As an example:

    This was something that hit me self-publishing (science fiction, horror, Cthulhu mythos type stuff).

    Do you make your own covers or hire someone to do it. Especially when you are first starting out.

    Ultimately, you want to make the investment as tinkering with graphics apps takes way too much time away from actual writing. This is a perfect example of where not to cut costs.

    Also, I enjoy writing much more. It is a minimal investment of effort and although it takes discipline (the hardest part) you can do it just about anywhere.

    With that ancient but ubiquitous technology known as pencil and paper you can do it anywhere.

     

  2. Outsourcing my biggest SW is one of the best things I’ve done in my entire life. Although, my SW cost me about 3-4k a month to a consultant.

    It’s worth it because my offline on site business is multi six-fig a month. I never thought I could teach somebody to do what I do, and not have them as an employe. When I explained to people that they are far better of having a business and work as a consultant for me, than having to be an employee (where I live we pay 60-70% taxes, scandinavian country)

    I still have some SW that I still do myself, but I am working on outsourcing this to. One thing I need to outsoruce is customer service, and the only VA’s I can find is in english, and I need one in my native language. Should probably look for more.

    With my next alpha 2.0 business it seems way easier to outsource everything since its in english, and VA’s, video editors etc all know english.

    A good read, that got me into outsourcing is “the richest man in babylon” … it’s more inspiering than “how to outsource” I read it only like 5 years ago, and I remember it was painful because there is nobody doing what I do, and I thought.. fuck how can I get my money to work for me when I am the only one doing it? Can anybody learn this? I was wrong.

    My point is this, a lot of people will “do it themselves” instead of letting someone else do it, because we think that we are the only ones capabale doing it. Just realise, you, and I we are not special. We are not superhumans.

    The reason, I went from 5-figure to 6 figure-borderline, to multi six figures in less than 6 months was because I outsourced my main SW to a consultant, the dangerous thing right now is I need to build a bench of consultants that can do this work in case he quits/gets ill etc.

     

  3. Hey Caleb, once you’re outsourcing, where do you find your VAs… Thanks

    Fiverr, Upwork, Brickwork India, and through my own Google searching around.

    Do you make your own covers or hire someone to do it. Especially when you are first starting out.

    Hire someone (unless you are already an expert artist).

    a lot of people will “do it themselves” instead of letting someone else do it, because we think that we are the only ones capabale doing it. Just realise, you, and I we are not special. We are not superhumans.

    Yes. Ego is a big part of it. And the need for control.

    As one of my mentors puts it, you want to be in charge, not in control.

    I’m Alpha 2.0; I don’t give a shit about being in control. I just want the money and the lifestyle.

    The reason, I went from 5-figure to 6 figure-borderline, to multi six figures in less than 6 months was because I outsourced my main SW to a consultant

    Well done.

  4. you want to be in charge, not in control.

    OK, so FWIW, that quote may well have changed my life… That is quite profound.

     

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