Growing Assets By Outsourcing

June 02, 2008

If you are not familiar with the concept of growing assets, I strongly recommend you to read Passive Investing vs Growing Assets first.

Grow Assets By Outsourcing
Photo by inju at Flickr

Growing assets beats passive investing for many reasons – like the ones pointed here – but is not an easy thing to do. While many of us are just fine with putting in some work to do the magic, you may be one of the people who have enough free money and are looking how to invest them in valuable assets without having to work for months. Regardless in which category you fall, a bit of leverage on your efforts can have significant impact on the final result.

To say it simpler, if you want to create an asset yourself, it may take let’s say six months of hard work. If you outsource part of the hard work to someone else, or to a team, it can take 1 or 3 months. Of course that will cost you money.

Why Outsource And How Is That Different By Passive Investing

Outsourcing to create a valuable asset is as close to passive investing as much of the work you transfer to someone else. In this strategy you never transfer 100% of the work – this would mean just to purchase some item that is already offered for sale. You goal is to combine your work with the work of the one that you hired in order to achieve the best result.

Usually your work will be 10% – 20% of the entire amount but that would be the most important part of the work involved in creating and growing an asset. In most cases that would be the idea phase, planning and organization. It’s not a coincidence that even in the corporate world people who work in the organization, planning and ideas are very well paid. The success of any business depends on these pillars.

Of course, if you are not good in one of these stages, you can outsource them too in favor of something, that you are good in.

The power of outsourcing is realized best when you do the things you are doing best and outsource the rest to people who do those things best. If for example you can create a website and you are good at the idea and accounting stage, you should hire a designer and programmer to do the rest. Even if you have acceptable level of skills in design, it would probably take you 3 times more to produce 3 times worse result than a professional designer.

Assets That Can Be Grown By Outsourcing

Every job in the world can be outsourced and I recommend you to outsource everything that you suck at and can afford to hire an expert for.

Do you need ideas for assets that you can create by outsourcing? I’ll give you some:

  • Writing a book or e-book. The books and especially e-books are created once and then sold over and over again. They are perfect assets to grow. If you have no cash, you can write, pre-press and edit the book yourself – many people do that. Most would probably outsource the pre-press and publishing process. But if you are not a writer, you can even hire someone to write the book by given by you topic and guidelines. This way you do only the research for a topic in demand and participate in the idea phase, then let someone else do the writing. (Note: this works better for non-fiction books!)
  • Creating other intellectual product. The online marketers are crazy about “info products” for a reason. Just like the e-book, a video, membership site or training program is created once and sold many times. You can take one or more of the most leveraged parts in such a work – the idea creation, the market research, the marketing and planning – and outsource design, programming, content creation and SEO
  • Software. Essentially, the software is not different than the other info products. It you have a good idea or can market well, you can hire programmers to do the tough job.
  • Services outsourcing. All kind of services can be outsourced. This is how the business world works – the boss provides service to clients, but he does not do the service himself. He hires people, i.e. outsources to them the un-leveraged work and often participates only in the deal-making which is the most leveraged activity in the company. How can you use service outsourcing? No difference than the previous items – pick the leveraged work for yourself – and one that you are good at – and outsource the rest. A company providing services is not exactly an asset bringing passive income, but can be taken pretty close to such.
  • “Real world” outsourcing. Not only services or IT can be outsourced. If you buy a piece of land, you can pay someone to grow vegetables on it. If well planned, this will ensure you have cheaper vegetables than you can buy on the market. You can hire someone to build a house for you – this way you will “grow” a real estate asset by outsourcing.

Where And How To Outsource

If the asset you want to grow is some kind of information product (book, video, training program, software), the answer is one – outsource online. There are several approaches you can take:

  • Search engines. Search your favorite engine for “outsource +activity”, for example “outsource C++ programming” or “outsource CAD/CAM design” etc. You are likely to find many companies who offer outsourcing
  • Blogs. If you pick any blog directory like Technorati you will find out that plenty of professionals publish blogs. Search the “About” or “Services” pages to see if the blogger provides service. The advantage is that based on their blog you may get some first impression about the quality of their services.
  • Freelance boards. Sites like Elance, Guru or RentACoder give you access to professionals in many categories worldwide
  • Word of mouth. If you know people who have hired professional for a similar job as them for impressions and contact information. The first-hand impressions are the best testimonials for someone’s professionality

If you want to create “real world” assets you may want to search your local yellow pages or again use the word of mouth.

There are many fine points which make outsourcing successful or disastrous. Many people do the mistake to look for the lowest price possible or just to find someone who will do a job cheaper than they would do themselves. Such approach will not take you far away. Remember, you are looking for leverage, so saving few bucks and receiving low quality work is not the way to go. I’ll write soon more about successful outsourcing because this is one of the greatest way to do semi-passive investing with remarkable results.

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Jose L. Aguilar- SharkInvestor.com Author

Being able to Invest & Trade on your own is the most amazing road to financial independence & optional retirement. I was very fortunate to have amazing mentors and read many amazing authors, I hope you enjoy my articles & books suggestions which are made with the intent to share my experiences as simple as possible.

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By Jose L. Aguilar

Being able to Invest & Trade on your own is the most amazing road to financial independence & optional retirement. I was very fortunate to have amazing mentors and read many amazing authors, I hope you enjoy my articles & books suggestions which are made with the intent to share my experiences as simple as possible.

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2 Comments

  1. Curt

    To me, the investment in time to try and fine good resources just isn’t worth the effort. I would rather homesource or use college interns. As the dollar weakens, the oursourcing trend is likely to slow. Many manufacturing companies have already begun moving operations back to the US. The advantages have seen their best days. If you have already investing in outsourcing then you will probably continue, but otherwise now is not the time to start.

    Reply
  2. admin

    Hey Curt, you have a nice site there.
    The point of outsourcing is not so much about going abroad and looking for lower rates. You can outsource in your city if you want. The point is just to get the right people do the work for you instead trying to do everything yourself.

    Reply

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