In 2022, the popular opinion when it comes to work is that one should start their own business. Of course, not everyone buys in this idea, but the important thing to note is the viability of any person to start a business. Thanks to the internet and a growing demand for the products, any person today can start their very own business and prosper in their market of choice. This is however a very idealistic look at the matter; truth be told, 90% of all start-ups end up failing.
There are many causes for a start-up’s failure, the major ones being issues in teamwork, scaling and cost management. These hurdles are difficult for any new entrepreneur to overcome, and this is where outsourcing can come in to lend a hand. Outsourcing basically refers to handing over responsibility for a certain department(s) or function(s) of a business to a third-party service provider. To help any new entrepreneurs out there, here are some of the reasons you should consider outsourcing for your start-up.
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Supporting the Core Team
During the early stages of managing a start-up, entrepreneurs are naturally inclined toward performing various duties themselves for cost saving. This seems like a good approach, but it can lead to an eventual burn out as the business owner and any partners run themselves ragged managing everything, as demonstrated in a report by Entrepreneur.
It is impractical to expect an in-house department dedicated to these side or non-core activities, so the smart solution is to outsource. Outsourcing can solve this issue by providing a start-up’s core team with qualified and talented professionals to take up the workload. With this advantage, the core team can focus on areas of pressing and strategic importance and leave the mundane work in the trusted hands of a high-quality outsourcing firm.
Providing Infrastructure
When a start-up is in it’s infancy, there are many issues to be overcome. The biggest of these issues is the lack of infrastructure. Infrastructure refers to aspects of the business such as an office space, a full team of employees, technology and other necessities in the same vein. With the already immensely difficult process of lifting a business of the ground, it is simply not feasible to expect any infrastructure without heavy capital investments.
Outsourcing can alleviate this concern by providing all the basic components of the infrastructure, barring the office space. With outsourcing and staff augmentation, a start-up can easily assemble a competent team of talent from a global talent pool. This team comes with the added bonus of technology and industry knowledge that are difficult for any new business strategy to attain easily. With this infrastructure, the dream of starting your own business can quickly become a reality.
Improving Scalability
Another wall that start-ups tend to hit in their early stages is scaling. Scaling essentially refers to setting up your business to be prepared for growth or negative growth, both in capacity and capability. Ideally, a business should be prepared in advance to meet an increase or decrease in growth. However for a start-up in it’s early stages this is not feasible.
The workload can increase dramatically when operating a start-up, and the urgent need for employees can lead to rushed hirings to pick up the slack. Therefore, outsourcing to a firm to take care of the hiring process and do the much-needed due diligence can drastically reduce the risks associated with scaling up. Similarly, if scaling down is required later, outsourcing offers the flexibility to this as well.
Better Budgeting
Start-ups largely rely on an initial investment from the founders. This means that costs must be strictly monitored and controlled to stay on track until the business starts generating a profit. It can get very difficult to do this when managing various aspects of the business in-house. Outsourcing yet again helps here by providing a set amount of expenditure to set aside for every month, allowing for more controlled budgeting and steady operation with no surprise expenses.
Risk Mitigation
As with anything in life, launching your own start-up comes with many risks, most of which entrepreneurs are not even aware of. This is one of the biggest reasons so many start-ups fail, they do not even realize that they are making big mistakes until it is too late.
This is a situation where having an outsourced team managing your business functions can potentially save the business. Matters such as industry trends, new technology, government regulation and more may slip right under the nose of an entrepreneur who does not know how to navigate the industry landscape in the early days of the start-up. An established outsourcing and staff augmentation firm with relevant industry experience can advise entrepreneurs on these matters and help them stay on top of things before they can get out of hand.
Promoting Healthy Competition
Another hill to traverse for any start-up is the competition. For most business ideas out there, there exists an established competing business that bears a solid hold on the market. This can become an insurmountable hurdle for a start-up as they lack the sheer manpower and expertise of an established competitor.
Outsourcing can serve as a great equalizer, allowing for even the smallest of start-ups to have access to the expertise and manpower that an established business may have. This is an era where start-ups can rise against established competitors through outsourcing and staff augmentation support.
What to Outsource?
It is important to assess what part of the business should be outsourced. Technically, every task that is not a concern of the core team can be outsourced, but of course that is not realistic. If we take the statistics as a guide, a 2019 survey by Clutch reports that businesses tend to outsource accounting (37%), IT services (37%) and digital marketing (34%).
Out of these three, accounting and bookkeeping are the safest bet in this context. Skilled accountants are necessary for any business and can prove quite costly if hiring in-house. In response to this demand, firms like Expertise Accelerated who specialize in providing general accounting and bookkeeping services at a reasonable cost have popped up in the market and are a popular choice for start-ups looking to outsource. A more detailed guide to outsourcing accounting operations can be found here for any entrepreneurs interested in the prospect.
Conclusion
Outsourcing is one of the best options available to start-ups and small businesses in the early stages of their growth. As reported by Freshbooks, 66% of small businesses in the US outsource some of their functions to other small businesses – outsourcing firms and third-party service providers. This staggering popularity bolsters the proposition of outsourcing, and any young entrepreneur should consider outsourcing functions like accounting and IT for smooth sailing.
