Outsourcing for Marinas, Boatyards, and Other Small Marine Businesses
Cost-effectively Meeting the Need for Strategic Expansion and Improvements
by Phil Friedman, Marine Industry Consultant
Even in this recovering recreational marine market, I’m finding that a significant percentage of marina and boatyard operators remain reluctant to undertake strategic expansion or make long-needed improvements. Their inertia may be fueled by a FOAP (Fear of Added Payroll). Or it may be caused by not wanting to siphon in-house labor away from their current work. But whatever their reason(s) for not taking advantage of current opportunities, they feel mired in place by circumstances.
If this rings a bell for you, consider outsourcing. Outsourcing doesn’t necessarily cost less than in-house work, but when indirect costs are added to the tally, outsourcing often comes out the winner.
The Good and the … Not So Good
A major factor is that outsourcing avoids adding ongoing payroll that will most likely continue well past the completion of the specific projects involved. It also avoids contributions to payroll taxes, which greatly benefits overheads.
Outsourcing also enables you to take advantage of very specialized experience and skills that might not be supportable as an in-house resource in the context of your operation.
Finally, outsourcing can be an effective palliative for the passive resistance to change-related projects that is sometimes found within management.
Against that, there are several potential disadvantages to outsourcing.
Foremost, outsourcing involves a significant loss of direct control. The employee who works for the outsource contractor is beholden primarily to his or her employer, and only secondarily to you. If you are unhappy with the quality of work performed by an outsource contractor’s employee, your recourse is to the outsource contractor, and not necessarily to the employee.
Moreover, whatever recourse you have is governed by the terms of your contract with the outsource contractor. With outsourced labor, you often don’t have the power or standing to simply walk up and tell someone his or her work is dreadful, and “…by the way, hit the road, bud.”
Outsource to Fit the Circumstances
It’s important to understand the specific circumstances in which outsourcing works best. In small-business environments, outsourcing works best for limited-duration projects that have measurable outcomes.
For example, suppose you want to improve your costing and bidding procedures. In such a case, you want to implement the target improvements within a given amount of time, say, three months. You want to reduce the pain and dollar costs associated with working up submissions for RFPs and other forms of quotes. You want to improve your ability to monitor the progress of preparations for submitting bids and proposals. Additionally, you want to be awarded an increased number of contracts at profitable pricing levels. These are all quantifiable results that can be incorporated into an outsourcing contract and monitored during and at the conclusion of the work being performed.
Don’t outsource if you have no way to measure the outcomes. Be careful, as well, to clearly define your goals and objectives before chasing those objectives by outsourcing. Do you want to initiate a project in process improvement? Are you looking at improving cost control? Or are you, perhaps, thinking about prototyping a new product? These are projects with parameters that can be well defined, and as such, are suitable candidates for outsourcing to a team with specialized background and experience. Moreover, they are projects with clearly definable and measurable outputs.
To be sure, you may also envision projects that have less well-defined objectives and goals, such as improvements in customer relations or market profile. However, these latter kinds of projects require not only longer-term attention, but longer-term commitment and follow-through. Projects with “softer” goals and less well-defined time-frames may be inconsistent with the hit-hard-and-run type of help that is usually available from outsourcing companies. Therefore, be prepared to recognize when outsourcing does not fit well with the projects you’re considering.
Experience Always Matters
When it comes to selecting an outsourcing company or contractor, nothing counts as much as successful prior experience. Some would-be business gurus counsel to hire for talent and potential, which may work when you’re hiring for an in-house position. But when you’re outsourcing, you’re not looking to develop someone else’s potential; you’re looking to reap the immediate benefits of their accumulated expertise and experience.
Do you remember the whimsical advice that went, “When you hire a lawyer or a surgeon, look for someone who stopped practicing a long time ago and started doing and accomplishing the work…?” Well, the irony of this play on words notwithstanding, one of your objectives in outsourcing should be to gain the services of someone who can absolutely hit the ground running.
Keep in mind that outsourcing is like leasing an automobile: you only pay for the services you need, and only for as long as you need them. You outsource to avoid ongoing permanent payroll additions. Therefore, when you outsource, you never want to end up paying while the outsource hones his or her skills and figures out what he or she really needs or wants to do (when they grow up).
Don’t Even Think About Making It Permanent
When you outsource, don’t even think about temp-to-perm conversion. The best outsourced professionals are those who don’t want employment, and don’t want to string out a project indefinitely. The best outsourced people are, if you will, hired guns — in for a period, get the job done, and move on. They are completely project oriented. And when the project is over, they’re happy (and most comfortable) to move on.
Those kinds of outsourced professionals are never afraid to tell you what they think — which is often a lot of what you’re paying for. Unlike those who are looking for long-term employment, the best outsourced professionals are not swayed by what they think you want to hear.
That doesn’t mean they’re arrogant or stubborn or unresponsive to your views and needs. They’re just 100% their own people: confident in their skills and experience. In other words, almost everything that makes them solid, valuable outsources often necessarily gets in the way of them being good, long-term employees. Consequently, if you want to reap the benefits of outsourcing, always recognize the difference between outsourcing and recruiting for in-house staff. And once you try it, you’ll like it.
— Phil Friedman
About the Author: Phil Friedman is a marine industry consultant, project developer/manager, and marketing and small-business startup expert with the Port Royal Group in the greater Fort Lauderdale, FL area.
With 30 some years in the marine industry, Phil worked as a yacht designer, boat builder, marine business manager, yacht surveyor, consultant, yachting writer and editor, and industry educator. He’s also trained and experienced in interest-based negotiating and mediation. His current work includes the start-up management for two new yacht lines being built in China.
Phil is always up for talking about new projects and can be contacted at 1.954.224.2145 or firstname.lastname@example.org