By outsourcing some of my business tasks last month, I was able to save $7850 last month. 

I am a strong believer that Time is Money.  If you also believe that, you should be a strong believer in efficiently allocating yourself to maximize the return of your time - there are only 24 hours in a day.  And because I am a firm believer in this, I need to know how much my time is worth.  By determining how much I’ve made in my different money-making activities and the amount of time I spend on those activities, I value my time at about $60 per hour. 

I Outsourced 120 Hours of Work Last Month

Last month, I used 2 types of outsourcers:

• A Low Cost offshore firm to handle repetitive easily describable tasks
• A Part-Time remote contractor to take care of some customer service tasks within some of our businesses

In total, it cost me $1750 to outsource 120 hours worth of work.  I think the blend of resources is perfect and I couldn’t get everything done with just one type of outsourcer:

• The Low Cost offshore firm wouldn’t be able to handle some of our more complex customer service tasks and I would spend way too much time trying to explain how to complete them.  There is also a language and time barrier.
• Our part-time resource is great and makes my life so much easier but we have a lot of real simple tasks that take a lot of time.  It would not be a good allocation of her time.

So How Did I Save $5450?

If my time is really $60 an hour, the work that they did would have cost me $7200 of my time to complete.  By paying other people $1750 to complete them, I saved $5450. 

Did that $5450 show up in my bank account at the end of the month?  No, of course not.  I would have had to work on 120 worth of revenue generating activities, which obviously wasn’t the case:

• Some of this time I saved was used on other activities that I would not have been able to get to before so I was able to tie up loose ends
• I didn’t spend all of the 120 hours working.  Part of the reason I want to outsource the work is that it gives me more freedom with my time, which is much more valuable than any dollar amount you could put on it
• I worked on activities, such as new product development, that will pay off much more than $7200 when they’re implemented.  $60 might be my hourly rate now but I think one hour of work that I spend on some future project is going to eventually give me more than $60.

The Additional Benefits of Outsourcing 120 Hours Last Month

I’ve already talked about the time that was saved last month and how that is probably the most valuable benefit of getting someone else to complete the work for you.  But there are other benefits besides the cost savings:

• Customer Service was improved.  By having someone able to pay full attention to some of our clients, we were able to give them a better experience than we could have because we have 50 different things to do.  This is an investment that will also pay off down the road in longer lasting clients and good referrals.
• Activities that Should Get Done, Did Get Done.  A lot of the work that I outsourced are activities that we just do not like doing.  It might be running reports on a weekly basis that take several hours of our time.  If it were up to us, we might not do them (which often happened) and then our business suffers
• We were able to provide work for other people.  This seems sort of obvious with owning a business but I think it’s a positive to be able to have jobs for other people.  Yes, they would probably get a job somewhere else but I feel that by efficiently allocating my time, I am able to provide work for someone else and get a positive return on our investment.  It’s a win-win for everyone.

Have you ever calculated how much you could save by outsourcing some of your tasks?