Top 5 Benefits of Outsourcing for Startups
There are a lot of things you can do to take your startup to the next level, one of which is outsourcing work. Read on to learn the benefits of outsourcing.
These days, there are startups helping other startups start up! That is outsourcing in a nutshell.
When you hire another company to perform a certain task instead of handling it in-house, that’s outsourcing.
Outsourcing is a lucrative industry. Globally, annual revenues have been hitting north of $76 billion since 2007, peaking at $104.6 billion in 2014.
This shows several businesses in the United States and beyond find outsourcing beneficial. If you aren’t outsourcing yet, you don’t know what you’re missing. In this article, we’ll reveal the benefits of outsourcing.
Read on to find out more!
1. Cut Costs and Increase Your Bottom Line
All businesses hoping to make a profit must adhere to one fundamental fact: revenues must be greater than the costs.
If your startup is burning through more cash than it brings in, two things will happen. You’ll either go out of business or go back to your investors and ask for more cash to keep the lights on.
The good news? Outsourcing will cut your costs.
Here is how it can help.
Let’s say your startup designs, manufactures, markets and sells drones. At the very least, you will have the following departments: research and development, sales and marketing, and finance/accounts.
These departments have roles to fill. The more talent you bring on board, the higher your payroll. There are also other associated, such as leasing a bigger office space to house your staff.
What if you outsource an entire department, say sales and marketing?
There are thousands of sales and marketing agencies out there that specialize in helping startups market and sell their products. The cost of hiring one agency is much lower than the cost of running an in-house sales and marketing department.
Plus, these agencies are usually very effective. Your startup will sell more product as a result, your revenues will increase, and your bottom line will fatten.
2. Focus on Your Core Business
Many startups don’t fail because they’re startups. They fail because some founders want to wear too many hats, even hats that don’t fit their heads.
Sure, it’s understandable that many startups are usually on shoestring budgets. So, why hire a pricey chief financial officer when you (the founder), can handle the money? Never mind startups with CFOs are more attractive to investors.
However, taking on tasks that aren’t your core specialty can be detrimental to your startup. If design and engineering is your strong suit, focus on it. Taking on other tasks means losing focus of your core business.
Instead of worrying about the finances, why not hire a company that offers on-demand CFO services? Find out more now!
3. Gain a Competitive Edge
Startups are always finding ways to knock out the competition. Obviously, the best way to lead the pack is to offer unique, top-quality products/services. Providing unique products and services has many moving parts, and outsourcing has to be one of them.
You see, when you outsource you gain access to skilled expertise.
If you’re designing smartwatches, for instance, you can outsource manufacturing to a company in an overseas territory (China is a hot favorite) where costs are lower. The company will assemble your product in record time, and because costs are lower, you’ll have more product.
Compare that to a startup that decides to do everything in-house. Since they don’t have an elaborate manufacturing structure in place, it will take them longer to bring their product to market. By the time they do, your product will already be on people’s wrists. That’s how you gain a competitive edge.
If you’re still doubting the ability of outsourcing to give your startup a competitive edge, think about the iPhone. Designed in America, manufactured in China.
4. Create Business Partnerships
The entrepreneurship hype train is cruising full-throttle. The American dream. The path to wealth and fulfillment.
Well, don’t buy the hype. Entrepreneurship can be a lonely journey.
How do you avoid falling into the loneliness trap? Strike business partnerships.
There are a couple of ways to get strategic partners. Attending conferences and networking will do the trick, but so will outsourcing.
When you outsource a certain task to another company, you aren’t just entering into a business transaction. You’re also getting a business partner; someone you can rely on for advice when the going gets tough. The more tasks you outsource, the more partners you get.
Partnerships also make your startup more valuable. Investors, for instance, are usually more inclined to invest in startups with multiple strategic partners.
5. Take the Battle to the Big Corporations
Big companies are an ever-present threat to startups.
If they like what you do or feel your product will disrupt their business model, they will buy your startup. Or they can copy your innovation and run away with it.
If you’re not facing any of these threats, you still won’t have the financial muscle to compete with the big companies. They can afford to hire the best talent, spend as much as they like in R&D, and whatnot.
However, outsourcing is leveling the playing field.
Today, startups can hire the same outsourcing companies working for the big boys. You get access to the same level of skills and expertise. If your product is a solid industry disruptor, there is no reason your startup can’t take the battle to the big corporations – and leave them for dead!
Leverage the Benefits of Outsourcing
In a competitive world where a new startup is more likely to die than survive, entrepreneurs have to get most decisions right.
When it comes to outsourcing, which way should you go? Since we’ve fleshed out the benefits of outsourcing, the decision is clear. Your startup needs to outsource.
Need more startup tips? Explore our blog.