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The Truth of Outsourcing for Food Business Owners

Posted by PCC Small Business Development Center on March 22, 2016

outsourcing your food businessYour food business is your baby, which makes it hard to let go of any aspect of your business. But just like hiring the right staff to do the work you can't, at some point your business needs to hire the right contractors to help you with work neither you nor your staff can handle so you can focus on helping your business grow. The benefits of outsourcing for small business owners is undeniable, and in this post, we'll discuss why outsourcing your food business tasks is so important.

Work on Your Business, Not Only In It

You started your food business because you love creating your product and want to share it with others. That is the heart of entrepreneurialism. However, you can find yourself working long, exhausting hours to keep the business going if you believe you’re the only one who can make your product. This means you are working in your business not on your business, a concept discussed in The E-Myth, and severely stunting your business growth.

When and What to Outsource

So the question becomes, when do you know you need to outsource? The answer is actually quite simple. Sit down and evaluate what the real goals of your business are. What are the things that you and only you can accomplish, and which things are the ones that only your business can offer to customers? Anything not on those lists should be considered a potential task to outsource. You should also ask yourself these questions:

  • Do you need to reduce certain fixed costs in order to optimize your budget?
  • Are there tasks that must be done for your business to operate that are outside your business' focus or expertise?
  • Are there tasks that must be done for your business to operate that are outside of your or your staff's expertise?
  • Are general tasks taking away from your, or your staff's, ability to focus on core responsibilities?

Because of how important your business is to you, it can be easy to think that you should or must do everything yourself. But the truth is, you don't have to do it alone, and you shouldn't. If you're still too close to your business to realize which things no longer need your direct focus, consider this list of tasks:

  • Fulfillment
  • Co-packaging
  • Distribution
  • Payroll and other accounting
  • IT infrastructure
  • Website design, maintenance, and updates
  • Marketing
  • Customer support

Benefits of Outsourcing

To be sure, you need to be careful about how you outsource and whom you choose to fulfill your outsourcing needs. You will, after all, get what you pay for, but that doesn't mean that outsourcing is going to be expensive. Always be sure to weigh the benefits and the costs of outsourcing according to your business specifically!

With that being said, outsourcing allows you to build a team of very skilled contract professionals without having to develop a team of full time hires. Outsourcing diminishes business risk in areas outside your business expertise (especially IT and financing) while boosting productivity and saving overhead, possibly by as much as 60%. It also means developing performance metrics that better allow you to define and achieve success both in the aspects you outsource and across the board within your business.

In this way, outsourcing should be considered as part of your business plan. In doing so, you can best develop your brand message and focus on what you love to do - sharing your food products with new people and interacting with customers.

Learn more about Getting Your Recipe to Market

What Outsourcing Looks Like for Food Businesses

As a food business, there are also some very specific ways you can outsource that will help your work, specifically hiring a co-packer. Once your business has grown too large to stay in a non-commercial kitchen, you have two options—buying or renting the production space and equipment you'll need, plus hire trained staff to use them and ensure that production meets local and federal regulations, or outsource to a co-packer to handle this level of production for you. Hiring the right co-packer can save you both time and money, not only because you'll save on the direct costs related to production, quality, and staff, but because you won't need to manage a production facility.

Real Success

Don't just take our word for it—follow the example of Getting Your Recipe to Market class alum Josh Fegles, the owner of Jude's Foods who understands the benefits of using a co-packer based on experience. He spent years baking and delivering Jude's Foods cookies himself, and as his business grew, he realized that, at scale, it wasn't something he could continue to do without putting some serious limitations on the company.

"Outsourcing allows for scale because, as one person, I limit the businesses capacity," he said. "Even with my family and a small team of help, our capacity and reach quickly finds its limits." Fegles set a goal for growing to the point where he could partner with industry experts—a co-packer and a distributer, specifically—so he could focus on what only he could do. "Now that I have a co-packer, I have no limits on production and now that I have a distributor my cookies can reach from southern Oregon to Northern Washington."

Now that you understand what kind of outsourcing your food business should be taking advantage of and the benefits of using a co-packer, you can audit your business plan to see where your business can grow by taking advantage of these options. To learn more about how to make the most out of your food business and entrepreneurial dreams, consider the Getting Your Recipe to Market program from the PCC Small Business Development Center. Connect with experts, get access to exclusive tools, and receive personalized business advising through this unique program, geared specifically toward small businesses in the food industry.

As Fegles said, "The best approach I have found is to partner with industry experts who can expand your capacity and your reach so that rather than limiting your business to your own ability, you're able to expand beyond what you alone are capable of."

Sign up for the Building a Business Mini Series today!

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The Oregon Small Business Development Center Portland Community College has  helped thousands of businesses over the past 40 years. We combine one-on-one  advising with programs taught by business experts, giving our clients the  resources they need to grow their businesses. We’ve celebrated many successes  with our clients. We'd love to celebrate your success. 

Topics: Small Business, Growing a Business, Food

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