3 Reasons Why Outsourcing Could Be A Good Thing For Your Startup

Launching a startup is risky. Around nine in 10 startups fail, and only half of them make it to their fifth year.

3 Reasons Why Outsourcing Could Be A Good Thing For Your Startup

Therefore, with such high stakes, it is crucial that startups get it right when it comes to managing their resources and deciding whether to keep all business processes in-house.

Since 46 percent of start-ups fail due to lack of cash, outsourcing could be the answer to keeping costs down. Approximately 90 percent of businesses think outsourcing is crucial to their growth.

However, turning to outsource for your startup is not just about reducing costs (although it is an attractive benefit) but it can help you improve your productivity, give you more control over your new venture, and help your startup conquer marketing challenges.

Keep Your Cost Margins Tight In The Early Years

Money is a major concern for businesses in those early years. Keeping your operating costs low is crucial to keeping your business afloat during those tough years while you get your startup established.

Outsourcing can help you do this. By removing the overhead costs of in-house equipment, office space, and staff expenses, your startup’s budget can be better managed.

Outsourcing can save businesses up to 60 percent of their operational costs, according to a publication by Biz Community. Outsourcing also gives you more control over your budget.

Freelancers and independent contractors are typically paid per project or time spent on the project, instead of full time. Once you can encourage your subcontractor’s involvement and inspiration, they can be extremely effective in less time (and costs) than that of a full-time in-house employee.

For this reason, be sure to praise positive outcomes, and make contractor feedback a priority. If you are worried about working with virtual teams when you’re outsourcing, try adapting your protocols for online working.

Focus on providing the right communication and collaboration tools, as well.

Allow Your Key Personnel To Focus On Important Business Processes

No startup entrepreneur knows all the skills to successfully launch a business. While it is not uncommon to find budding entrepreneurs wearing many hats during the early years of their business, most of them are not trained or experienced in those tasks.

They either learn as they go or are self-taught. In a study covering 193 startup post-mortems, 18 percent of startup founders said inexperience or lack of knowledge was a reason behind their startup failure.

By being objective and realistic, startup founders can choose to outsource the business processes they do not do well, which leaves them more time to focus on what they excel at.

The same goes for their employees. Capitalizing on your employees’ strengths and experience puts your startup at a competitive advantage.

Also, by outsourcing these business processes to experienced professionals you can be guaranteed to have the job done right – and done well.

Grow At Your Scale And Your Pace

Outsourcing can also help your startup chart its way into the future. Too often, startups are left asking the question, “When do I scale up?”

If you grow too fast, you risk going bankrupt or going into more debt than your business can handle. If you scale up too slowly, your startup could miss out on pivotal growth opportunities.

But with outsourcing, you get to control how fast you want to scale up and what that looks like for your business. This may mean you end up outsourcing additional employees temporarily during peak periods.

Alternatively, outsourcing customer service and delivery services could help you prepare for an influx of orders or focus on boosting your sales.

Regardless of where you are in your business journey, outsourcing can provide some handy perks. However, it also comes with its own set of downsides, and it is advisable that you take the time to consider both the pros and cons.

Now, the only question that remains is: is outsourcing right for your startup?

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