Action steps:
- Get recommendations for simple task outsourcing.
- Write a brief and run vendor search process for critical partnerships.
Functions to outsource
Visual design. Design is critical for a new company. Perception is the reality. If your product looks good, people will believe in you. Visual design is relatively cheap. Once you are committed to the project, start working with professional visual designers. Logo, brand identity and visual appearance of your product should be done by professionals within the first two months of your company. There is not enough work to justify a full time visual designer on a payroll from day one.
Initial distribution. You can start with third-party distribution channels. E.g. if you produce a new type of toys or clothing, do an exclusive deal with some store chain or big online retailer for the first few months. They get an attractive product to sell, you can focus on product development. Later on, you should control both production and at least some of distribution channels.
Product development. Yes, sometimes it is ok to outsource the development of your core product. You can launch a successful restaurant with a third-party interior design firm. Initial chef and bar managers can be hired on a short-term contracts. Eventually, you will transition to salaried staff. However, this only works if you can write a very precise specification and your requirements do not change much within the first few month. If the product description is uncertain, do development in house.
Operations. Incorporation, bookkeeping, payroll, taxes, and office management can all be handled by specialized service organizations and online solutions.
Real estate search. When you need a physical location, search it yourself and work with realtors in parallel. If they find a better option they get paid. If you found it independently, pay nothing.
Things to do yourself
Sales. CEO of the company is responsible for sales. This includes selling the idea to prospective employees, investors, distributors and consumers. You can not “just find someone to do the sales”. Only you can do it.
Product management. Founders do market research and define the initial product. Understanding customers needs and prioritizing the features are key activities to build a successful product.
Support. Yes, you can outsource support, but then you would not know your customers and what to change in the product. Founders should be extremely easy to reach and have full access to all customer calls and emails.
PR. Founders represent the company. Public and press are only interested to hear from the team. Project leaders are responsible for communicating the value proposition, positioning against competition and reacting to public opinion.
Recruitment. Professional recruiters can not hire better than average employees for no-name company with limited funding. You have the advantage of your personal network of connections. Use it.
Financial control. You can outsource bookkeeping, but financial control is still your responsibility. How much money is left in the bank account? How many months do you have? What are the projected revenues and expenses for the next few months? What are the numbers for your key business drivers? You should know the answers at any day.
Finding partners
Brief. For a critical outsourcing task like visual design or distribution partnership, start with a brief. Write down what do you need, what are your requirements, and what do you offer in exchange. You can compensate your partner with cash (know your budget), revenue share, exclusive rights to your product, traffic, and access to your customer base.
Marketplaces. For professional services look for marketplaces (e.g. 99Designs) and industry rankings (e.g. best SEO optimization agencies).
Recommendations. Ask your entrepreneurial friends, what services do they recommend?
This article is a part of Earlydays, an open guide for first-time entrepreneurs.
Written by Yury Lifshits — yury@yury.name — @yurylifshits
