In the early stages as a self starter, it often feels like you’re wearing every hat: the IT specialist, accountant, customer support representative, and digital marketer all rolled into one big messy conglomerate of cells you roll out of bed in the morning using coffees.
As my business started to grow, I realised the power of outsourcing specialist tasks over hiring. In this post, I’ll share some of my personal journey and the benefits of outsourcing when scaling your business.
Leveraging External Expertise
In the early days, I definitely attempted to become an expert in every field myself. This was especially true with my first endeavour where I wanted to create a scalable product.
However, I soon realised that this wasn't the most efficient way to grow the business.
So one of the most valuable lessons I've learned is that you don't have to do it all on your own. Which is... a difficult lesson? You sort of need to be a micro manager in the early stages while also, not be one at the same time. You have to trust people to things while also exactly telling them what to do.
Outsourcing was one method of many I used. Not THE method. It allowed me to tap into external expertise to handle non-core functions of the business, usually project wise.
For me it was IT professionals for specific tasks, accountant works and digital marketing agencies for campaigns. Outsourcing enabled me to focus on what I was good at, while leaving specialised and operational tasks to the experts.
This not only improves the quality of work but also saves you time and energy that can be channeled into strategic activities.
(I never used e.g a CFO or CMO as a service, because I preferred to have them inhouse, so that might be a different experience.)
Growing the Business: Cost Efficiency and Flexibility
When the business was scaling, managing costs became way more crucial. Cashflow is king, after all.
Outsourcing offered actually a pretty cost-effective solution for time intensive tasks. Instead of incurring fixed costs associated with hiring employees, outsourcing provided flexibility to get the skills I needed, when I needed, in the quality I needed.
First, to engage external contractors or agencies on a project-by-project basis, you have to ensure that you pay only for the services you need when you need them.
This flexibility is particularly advantageous for startups and entrepreneurs with limited resources, allowing them to allocate funds strategically.
Second, you need to make sure it is worth it - so think about time and opportunity costs.
What is often overlooked, are contract costs and coordination costs. If you need your own lawyer to go through contracts for payments that are 10k and above, it starts to sum up fast.
We had some standard contracts very early on, that we could re use over and over again, or, we used freelance services.
What was harder, was to create very clear descriptions what we needed and how we needed it. This coordination effort was a steep learning curve.
You could, after all, do something else that makes money in the mean time, called opportunity cost.
So getting the hang of how to tell an agency what you need in a way that is concise and clear might take more than one failed attempt. If I were to start all over, I would do smaller projects first to get the hang of it before, well, burning some cash on a marketing agency.
Focus on your Core Competencies
Outsourcing enables you to focus on your core competencies and strategic initiatives.
As a founder, you will have to do operational tasks in the beginning. After a while, however, your focus needs to shift to strategic work, entrusting non-essential functions to team members or external experts.
Simply for you to have the time to can channel your energy into areas of the business that will have the greatest impact. Like alliances, partnerships, sales, investor relations and so on.
This newfound focus on innovation, business development, and long-term growth propels your business forward without getting bogged down in day-to-day operational tasks.
Letting go is particularly hard once you cross the threshold of timesize, where you are not able anymore to know everything.
For me, that was after around 15 people. I had to trust others to full lead the development. The same time, the product became more of a black box to me, which is.. difficult.
While I still knew what was going on because I worked closely with a PO, I lost overview of the open tickets and what exactly went on, because the focus shifted on sales.
I do find that still extremely difficult, and I think it is much easier to take over a structure where you don't know everything from scratch, in comparison to something you basically built from the very first day.
In hindsight, offloading tasks to external people became a habit only once I accepted that there are tasks that others can do in a fourth of the time. As soon as I get to this sort of relation, I choose to let others do it, as it was cheaper that someone else did it than me taking the time to do it myself.
Your time is valuable, after all.
Long story short
As I reflect on my personal journey of scaling businesses, outsourcing has always been an important factor, but only in the recent years I started to appreciate it.
The more I grew the network of capable people and experiences, the easier it became to learn to delegate tasks that took a lot of time.
Outsourcing has the potential to alleviate overwhelm, access specialized skills and empower you to focus on your core competencies without the hassle of an HR process. But you may want to start small.
Preferably, consider starting with outsourcing tasks that take a lot of time, are not crucial to your biz and you know how to do them yourself. It makes it easier to tell them what to do, to communicate and to understand if they do a good job.
( On a note: be aware of startup consultants in the early stages. There are a lot of self declared experts that are pretty good at selling you stuff, especially if you are not well versed in the task yourself. In case of doubt, ask a mentor or coach and get a second opinion before signing anything. )