Startups Cannot Live Without Outsourcing

By David Drake, founder of LDJ Capital: Outsourcing is a strategy that startups cannot live without. When you start as a one-man show and have to do all things by yourself, you find out soon enough that some things you cannot do as well as others.

Despite its known drawbacks, outsourcing is a smart strategy that an entrepreneur can use well beyond its benefits of keeping overhead costs and operational expenses to a minimum.

Here are some signposts to guide you to a better outsourcing experience:

1. Outsource work that is not your core competency, or main service offering for which you want to build your expertise. If you want to build yourself up as an innovative shoe designer, then do not outsource the designing task itself. However, you can collaborate with a production house to execute your designs for you.

2. Use experts or specialists to gain insight into new technology, a new field or a new industry. With the example of the shoe designer, you can partner with a team who can translates your designs into 3-D drawings for a more compelling product presentation. Learning the technology yourself takes a longer time and would require you to invest in expensive software that may not be what you will need in the end.

3. You can gain inspiration from new people and teams who can provide fresh perspective into a problem that your team has been mulling over. This can help you or your team get over a rut.

4. Outsource to expand market or supplier base. Partnering with other teams can link you to a new segment of the market or to a wider network of service providers. This can strengthen your service or product offering. You might also find exemplary talent that can join your core operation in the future.

5. When outsourcing, go in with the intent to decentralize operations and lower costs, but without hampering quality or productivity. This is tricky as any new team you partner with will have to go through a steep learning curve not only with your product specification or service requirements but also with communications and company culture.  Lessen the negative impact by simplifying processes and expectations.

In all of the above, balance, the right timing and intuitive pacing are key and essential to gaining the best from the experience.




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