Outsourcing can be a startup game changer
Or it can bite you hard
Whether you’re a solopreneur or have a small team of co-founders, there are only so many hours in the day. Saving you time and allowing you to accelerate beyond the competition, outsourcing is the most logical thing to do. I’ve already written on saving time with startup admin but what about the bigger tasks? Like development, product, marketing? This is where outsourcing can be a game changer, but is also where things get a little more complicated…
For all the time it can save you, outsourcing can be a real *insert choice of expletive here.* It can cost you money and, worst of all, cost you the time you wanted to save in the first place.
Every startup I know has utilised outsourcing. There are not enough hours in the day, certain projects are outside their team’s expertise and there are plenty of people/companies out there perfectly poised to help.
However, it’s important to remember that there are also plenty of people who are ready to pounce, to take everything they can get from the stereotypically naive startup owner. Let’s call these sharks… Getting to the dream island where your startup operates perfectly is going to require avoiding a fair few of these!
So here are a few lessons I’ve learnt along the way.
Examples are good, but references are better
Like the shiny fins of a shark in the water, a good pitch deck or proposal is a glittering object that doesn’t always show the complete truth of things. Vetting those you outsource to means a lot of homework.
Pitch decks and proposals are riddled with examples that illustrate how the company did XYZ amazing things for a certain customer. They’re often data- driven so checking for the real life details with the customer is a great idea.
Even having done this though, you’re not likely to gain an impression of the full story. While it’s easy to get swept away with metrics, particularly vanity metrics, you won’t actually know whether this is someone you should outsource to. You need to consider whether the data being presented to you actually aligns with your company goals.
I learnt the hard way the importance of not rushing into things within my own startup. We were looking for a company to help with impact our social media. The one we chose honed in on increasing our following; while this is great in theory, and they had a background in boosting these numbers, it actually wasn’t what we needed at that stage of our business.
What we needed to focus on was the number of engaged customers we generated. We needed to focus on those few loyal customers who would download our app and refer friends. However it was all too easy to get swept away by the idea of a large social media following. In reality, we should have had discussions with the company we worked with just to ensure that our goals aligned before getting started.
Start with the why… Why are you outsourcing? What are your goals and how might outsourcing make them easier?
Once you have this written down, talk to a reference generally and not just to verify specific points of information or data. Think holistically- does working with the company or individual in question sound like something that will help you overall? Take time to really think about this and don’t rush your decision.
Factor for what you know, and what you don’t
If you’re outsourcing for technical work, you’ll always need technical oversight. Whilst you can see the physical result- for example, an app- and you can test whether or not it works without expertise, without technical oversight you’re likely to experience problems down the line. You won’t know whether the app is stable, for example, and you won’t know whether it’s scalable in the way that an expert would.
I’m lucky that in my startup, we had two technical co-founders so we could keep an eye on technical outsourcing ourselves. Even then, it was hard to keep oversight ticking over alongside everything else we had going on. In fact, we lost the first 6 months and a big chunk of our own money outsourcing to a team that couldn’t deliver what they promised.
Consider what you do know, and if you’re completely reliant on the outsourcing company without the relevant knowledge, consider getting a specialist project manager with the expertise you need to oversee it.
Consider outsourcing promises, and resulting KPI’s
When looking at an outsourcing agreement, most companies and individuals will promise certain results and outline key performance indicators. While both of these things are important, don’t allow them to underpin your entire interaction with a company or freelancer. Don’t base your business decisions off of unproven delivery- even if it’s offered in a contract.
Instead, view the interaction as an experiment. Take promises and key performance indicators with a pinch of salt. If it works then great, but don’t stay locked into a situation that isn’t working for you because you think that the company will eventually deliver on their KPI’s. In short- grow with the team that works for you.
One partner we worked with early on gave us some really impressive stats. We looked into them and the data was backed up by really good references. They’d delivered on what we needed before. In fact, they were so confident that they signed a contract with set KPI’s and a guarantee for hitting them.
One month in, they had progressed to practically nowhere. They hit just 6% of the target, and having offered to run a new trial for us for free, they still couldn’t deliver.
Ultimately, because we hadn’t pinned too much on this, everything was ok. The main thing that every business owner will learn is that some things work out and others don’t. The key is making sure that you’ve not based your business model around outcomes that you rely on someone else to deliver.
If you base your contract on terms that are critical to your business, you’ll force yourself into a really tight spot. You’re trying to force someone to meet expectations on something they can’t deliver. This can cost you valuable months or even mean that you start trying to play bad cop and enforce contract terms. Startups don’t have endless hours or the funds for protracted arguments, so avoid them. Pinning too much on promises and KPI’s is the equivalent of throwing yourself into the shark tank and hoping they don’t bite you. Not doing so gives you more freedom to experiment and to cut ties where things don’t work.
Agreeing mutual goals with partners is important, especially if you’re paying someone to deliver. However, there’s always a discrepancy between expectation and delivery. Like any aspect of outsourcing, what’s important is how you manage it!
Takeaways
Outsourcing can be a game changer. It can help you deliver your MVP, better retention, and even more customers. But I’ve learnt three key lessons working with a range of outsourced companies:
- Consider alignment to your startup, not just references
- Check for oversight, and ensure it’s ongoing
- Treat the first interaction as an experiment, don’t put your hopes and dreams on outsourcing
Before each new outsourcing I (now!) make sure we follow these steps. The result is not just better outcomes, but also more time. Time that can be spent developing the right relationships with the right outsourced partners. And ultimately, that means bigger, better growth for everyone.
For more tips on avoiding sharks and lessons I’ve learnt navigating the early days of startup life, be sure to follow my page.