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Although many things can be outsourced to vendors, you should always keep your business's core competencies, such as product design or customer service, in-house. — Getty Images/shironosov

As a small business owner, delegating tasks is the best way to free up time and improve productivity. Sometimes, this involves handing work off to employees, but it can also mean outsourcing these tasks to third-party vendors. Here are five steps to delegate tasks to an outside vendor.

[Read more: How to Delegate to a First-Time Manager]

Decide which tasks can’t be handled in-house

The first step is to determine which tasks can’t or shouldn’t be handled by your current team. There are two ways you can do this — by considering your business’s core competencies and by assessing the strengths of your staff.

Your business’s core competencies are the things it does better than anyone else. These activities give your company a strategic advantage and shouldn’t be outsourced. Your core competencies could include things like your customer service, high-quality products, or company culture.

You also need to evaluate your staff’s abilities to ensure you’re utilizing them to the fullest. Before you outsource something to a vendor, consider whether it would make more sense to train someone on your team to perform this task.

[Read more: Tips for Building Strong Vendor Relationships]

Do a cost-benefit analysis

A cost-benefit analysis will help you determine whether outsourcing a particular task makes financial sense. You’ll start by outlining the direct costs that come with keeping that task in-house.

These costs could include employee salaries, training materials, and software licenses. But you’ll also need to consider the indirect costs — possible errors, opportunity costs, and the time you spend overseeing that work.

Next, you can start gathering quotes from potential vendors. As you’re comparing quotes, look at the ongoing costs and that vendor’s experience. It’s also a good idea to find out if there are any upfront transition costs.

Starting small gives you a low-risk way to gauge that vendor’s communication skills, reliability, and work product.

From there, you can compare the cost of outsourcing the task to the cost of keeping it in-house. This will help you determine what will be the most beneficial long-term.

Assess the risks involved

One of the biggest risks of outsourcing is the loss of quality control. When you delegate something to a vendor, you no longer have control over how that task is performed. If the vendor compromises on quality, this can hurt your company’s reputation.

And sharing sensitive data with a third-party vendor can increase your risk of a data breach or unauthorized access. Unfortunately, there’s no way to eliminate all risks, but by evaluating potential problems, you can look for ways to minimize them.

Research different vendors

Once you’ve clearly identified which tasks you’d like to outsource, look for vendors that specialize in that area. You can find potential vendors by searching online, asking for referrals, and attending trade shows.

Researching potential vendors will help you determine what their online reputation is like. Read online reviews and ask those companies for a list of references. But most importantly, trust your intuition when you’re making the final decision about who you want to work with.

[Read more: How to Negotiate a Better Vendor Contract]

Start small

If you’re new to delegating tasks to vendors, it’s okay to start small and outsource minor tasks that aren’t critical to your company’s operations. Look for vendors that are willing to do a pilot project instead of asking you to commit to a long-term contract. At the end of the pilot project, you can evaluate how it went and whether you want to continue working with that vendor.

You can do tons of research and read all the online reviews, but you won’t truly know what it’s like to work with that company until you do business with them. Starting small gives you a low-risk way to gauge that vendor’s communication skills, reliability, and work product. As you gain more confidence in that vendor, you can slowly increase the scope of the work.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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