Startups are often limited by the capital and resources they have (or don’t have). In many cases, it’s these limitations that cause promising startups to fail.
In order to avoid compromising your new venture, it’s important to understand when and why outsourcing certain tasks makes sense. There's never been a better time to outsource—there are a wide variety of sites and services that connect you to the freelance talent you need to get the job done.
Understanding What Can be Outsourced
The ‘I can do it better’ mindset has killed many promising startups before they even had a chance to get off the ground. If you’re able to overcome pride and grasp the importance of delegation, you’ll have a much better chance of succeeding.
Venture capitalist Brain O’Malley thinks it’s nearly impossible to start any type of business without outsourcing certain aspects. “Not only can you move tasks off your plate, but many of these shops can perform the function better at a lower cost than you could on your own,” he said. Specifically, you’ll want to consider farming out some of the following tasks, jobs, or processes:
- Development. According to Taso Du Val, CEO of freelance marketplace, Toptal, “You can’t afford to make a hiring mistake when it comes to developers. It can devastate a budding startup.” Whether you need to build a website or proprietary software, it’s almost always better to outsource your work to a skilled developer than to hire a full-time employee.
- Design. There’s also not much need for having a full-time, in-house designer during the beginning stages of a startup. It’s usually much more cost-effective to outsource things like web design and packaging design.
- Accounting. Accounting is one of those things that’s quick and easy for an experienced professional to handle, but very time-consuming to deal with on your own. Unless a member of your startup team has an accounting background, it’s better to outsource it altogether.
Related Article: Outsource Your Own Job: Learn How to Delegate Effectively
Knowing When It’s Time to Outsource
Whether it’s development, design, accounting, or any task in between, it’s critical that you recognize and know when it’s time to outsource. Here are a few warning signs:
- Strained processes. You know it’s time to outsource when internal processes become strained. An example of a strained process would be when all members of a department are at their capacity on a certain task and still aren’t able to efficiently or accurately complete it.
- Long lead times. A telltale sign that it’s time to outsource is when you have long lead times for manufacturing or delivery. While this may signal a need to hire internally, don’t immediately jump to this conclusion. There are many ebbs and flows for startups, and hiring every time you experience an uptick in sales can spread you too thin when things slow down. Outsourcing, on the other hand, allows you to effortlessly scale.
- Poor quality. Finally, if you know you have a good product or service, and yet you’re suffering from poor quality, it may be time to outsource a job. This likely means there’s a certain skill that you’re lacking and calls for additional expertise.
3 Benefits of Outsourcing
Now let’s take a look at a few of the specific benefits of outsourcing:
- Lower cost. The most tangible benefit you’ll enjoy is cost-savings. Take a developer for example. A skilled software developer will typically take between one and four months to find and could cost between $10,000 and $40,000 just to recruit and hire. On top of that, you’re committed to paying a salary and possibly giving up some equity. On the other hand, an outsourced developer may only take a couple weeks to find and usually comes with no recruiting expenses. You’re also allowed to terminate a contact or end a relationship with no strings attached.
- More expertise. When you handle a task in-house, you often have to force your employees out of their comfort zone or skillset, which can ultimately compromise quality. However, when you outsource, you’re usually able to find someone who’s extremely specialized and knows exactly what they’re doing.
- Better focus. Ultimately, outsourcing allows you to focus on the tasks and processes you need to be spending your time on; as opposed to feverishly switching between things you aren’t proficient at. In other words, you’re more flexible and easily able to adapt.
Related Article: Stop Wondering: 7 Signs You’re Ready for Full-Time Entrepreneurship
The Great Balancing Act
Anyone who has ever worked with a startup understands the uncanny similarities between new ventures and circus acts. While it’s certainly a humorous comparison, it’s also very appropriate. In addition to the strange events and constant learning, there’s a continuous balancing act occurring on center stage. In this case, knowing which tasks to keep in-house and which to outsource can be a challenge. Use this guide to help you in your pursuit of striking the perfect balance for immediate results and long-term success.