This is another contributed article, this time from Stanly Joseph, Chairman & CEO, Business Advantage. While it is a case study in outsourcing what it really speaks to is customer service and focusing on core competencies. It is also shows that it is never too late to turn things around when there is a downslide. If we can seriously examine ourselves and our business at various times in the corporate lifecycle then a turnaround and a mea culpa is not only possible but will lead to great lessons learned and even better customer loyalty. Thanks Stan for the great wisdom and letting us peak over your shoulder while your share this unique story.
"The Decision to Outsource" - Lessons I Learned about Walking My Talk
By Stanley Joseph
I suppose I am what many say I am……..a man of many words, strong opinions, and a few good ideas. But what drives me is one thought, a dream ……..The American Dream.
Sure, initially it was about my family and me. And like most, I had to go out and earn what I have. But over time, the objective became clearer and my focus more intense. Now, this business, Business Advantage, is about helping the little guy, the entrepreneur; the small business owner; the risk taker. If you know your facts, you know that the small businesses of America are where dreams are realized and most new jobs are created….every day.
When we first launched the company, the thought was that we would provide small, private firms in the southeast region of the country professional services that they needed to be successful, at a reasonable price. But not until our business “hit the wall” from growth, did I realized that we were much more than that - we were the “business advantage” that most entrepreneurs like me never had.
You see, I believe that there are a lot of guys (and ladies too) out there just like me, with intensity, motivation and a good idea or two. But they never get their idea for their “dream” off the ground because they don’t know how to maneuver through the compliance and regulatory red tape of a business start-up. If they try to get the help they need piecemeal, the legal and accounting fees, the healthcare benefits and insurance costs, the specialized staffing and administrative help, and the like simply overwhelm them, even before they complete the business plan. One alternative, raising money, is extremely time consuming, and often leads to lose of control and, worse, lose of dream. So, their idea never gets its wings. Many entrepreneurs just give up.
Our primary objective was to provide all the professional services that the entrepreneur needed to successfully launch and maintain his or her business, and do it cost effectively. We would profit from our abilities to help the little guy (the small business entrepreneur) and reverse what I call the “law of large numbers”. Before the introduction of the Business Advantage Program, the small business owner had no platform to compete with the BIG BUSINESSES of corporate America...until now. We close the gap (in services and costs) between the value our clients are receiving compared to that of the BIG GUYS (Corporate America).
That’s the background.
Here’s the lessons learned.
Initially, we executed our business plan to perfection. We had a great board that was providing us plenty of introductions to business entrepreneurs that embraced our value proposition. Through us, the small business owner could have access to financial and human resources systems and professional staffing, health care benefits, retirement account management, disability insurance, worker’s compensation protection, and a host of other legal, technical and accounting services from one services provider. The key for the small business owner is affordability. Our services are priced to keep our client’s cost structure low, so they can in turn compete in their markets and hire quality employees like the BIG GUYS.
As we embarked on our journey and continued to be successful convincing small business owners to outsource their compliance, regulatory and administrative headaches to us, we lost focus on our own core business, and our value to the client. While, our revenues were growing rapidly, so were our administrative backlogs and customer service issues. Our technologies were inadequate at best, functionally weak and non-integrated in truth. Our business processes were broken. Our staff were overworked and untrained. Soon, we began to lose customers faster than we were winning them.
Sure, for a while we blamed all our problems on our vendors. But not until we stepped back and examined the reasons for our failures, and more specifically examined our broken business model, did it hit us. We weren’t “Walking the Talk”. We had grown so successful, so fast that we had outpaced our delivery model. The business infrastructure that had served us well early on could not now keep pace with our growth.
So we did what we encourage our prospective clients to do. We looked at all our options, and included outsourcing as a serious alternative. Though the tendency is always to keep most functions in-house for better operational and cost control, when you take an unbiased and objective evaluation of your core business value to your customer, you will often find functions that are better performed outside. Better for you AND better for your customer. That’s how companies like FedEx grew to where they are today. They can simply do the job better, cheaper, and faster than you can do it in-house.
So it was with us. We initially thought that professional services could not be outsourced. But when we evaluated more closely, we determined that our software systems infrastructure, our computer systems hosting, our administrative business processes, and select professional services, like billing and payroll tax filings, were best done through a partner.
But by the time we figured this all out, a lot of the damage was done. We had lost 25% of our client base when we finally made the decision – we would focus on our core business, our core capabilities, and outsource the balance. And we would re-brand the company to leave behind the mistakes of the past. First I drafted a letter to all clients and employees, explaining the situation and the changes coming. Then I personally went and met with all our customers, just like in the airline commercial. Over the next three months we transformed the company. We renamed the company Business Advantage, and re-branded. We reworked our entire business infrastructure, with a significant contribution coming from our outsourcing partner. As an example, we replaced six unique information systems with one integrated one. HRO services outsourced alone will save Business Advantage 30% to 40% from the operating budget, based on company projections of in-house costs to deliver similar services. More importantly, those clients that stayed with us now enjoy some major technology and services improvements, such as employee self-service capabilities.
Today, we do what we do best, and outsource the rest. We utilize one partner for HR-BPO and FAO technology and services. We stay focused on client care, more strategic services, and marketing our professional services to the next small business entrepreneur.
And now we do what I intended we would do all along, help other little guys realize their dreams.
About Business Advantage, Inc.: Business Advantage, Inc. is a total HR outsourcing solutions firm. The company delivers technology and services solutions to small business entrepreneurs who prefer to focus their attention on their business, and not administrative tasks. Business Advantage can be located on the World Wide Web at www.busadv.com.
About the author: Stanley Joseph leads the company as Chairman and CEO. Mr. Joseph brings a wealth of experience in building companies from conception to realization.
Most recently, Mr. Joseph was President and CEO of Private Pathways, Inc, a leader in the virtual ISP market place. In his role, Mr. Joseph led a company wide effort to build a company from a napkin, to a multi-million dollar operation in just less than two years, at which point the company was sold.
Prior to Private Pathways, he was the Chief Marketing Officer for GlobalAxxess.com, an Internet outsourcing company that provided payroll information and process solutions through a collaborative commerce engine. In the CMO role, Mr. Joseph managed all strategic marketing and sales functions. Stan joined GlobalAxxess.com when it acquired his company GlobalPaycheques.com, where Stan served as CEO. Stan also played a key role in closing the $7 million needed for the Series A round of investment for GlobalAxxess.com.
Mr. Joseph's success also has foundations in his lengthy tenure as founder and CEO of Cowan and Joseph, a full-service advertising and marketing agency specializing exclusively in healthcare marketing. In this role, Mr. Joseph led three major clients from concept to IPO, worked in conjunction with the Clinton Taskforce on Healthcare Reform, and authored over 150 articles in major healthcare and marketing periodicals.
Mr. Joseph holds a BA from the University of Wisconsin and is a graduate of the Wharton School of Business Executive Management Program. He still remains a member of the Board of Consultancy of the American Medical Association.
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