By necessity when just starting out, business owners wear several hats within the company. Possibly all the hats, at first.
They are the CEO, CFO, lead salesperson, marketer, manager and more. And as an entrepreneur who’s fully invested in their business, it’s hard to led go of the reigns in some areas of the business and embracing outsourcing. But eventually, something has to give. The time will come to hire staff and outsource roles to take things off your already stuffed plate.
For new entrepreneurs, this can be a difficult turning point. Missteps made at this stage can be costly—even devastating—to a startup.
Matt Rissell, the CEO of TSheets Time Tracking, his sixth successful startup, breaks down what to insource versus outsource at first. Here’s an outline on how to shape a team—and the leader’s position within the company—in order to strike business gold.
What is Outsourcing?
Outsourcing is a technique where business owners hire external people or third-parties to provide goods or services. It’s essentially getting someone else to do the work that doesn’t need to be done in-house. Outsourced work is often started in-house by the company’s own employees. When a small company grows, outsourcing becomes a necessary tool for small business owner who’s lost the bandwidth to continue to do all the work that needs to get done in-house.
What Can Businesses Outsource?
Many CEOs and small business owners have a hard time outsourcing. And sometimes, that can be a good thing—not everything should be outsourced.
Here are tasks that are often outsourced:
Bookkeeping is often outsourced, but only should be done when you feel confident you have a good bookkeeper. Small business owners also often outsource a small business accountant (which can be separate from a bookkeeper).
Small business owners can wear the hat of an accountant, but it takes time and energy to keep track of everything. Outsourcing to a business accountant early on can save you trouble in the long-run. Getting ahead of your bookkeeping and accounting needs early on can be crucial in your success as a business, so if you don’t have time to do it yourself or have no familiarity with the tax, outsource it.
A few aspects of marketing can be outsourced, but when the time is right to hire a top-level executive to build a marketing strategy and execution plan, bring them on in-house. Working with an outsourced marketing contractor or consultant is often a good way to test out whether you’ll work well with the individual before bringing them on in-house.
According to Statistics Brain, other common work outsourced by businesses in the United States are manufacturing services, IT services, research and development, distribution, and call centers.
How to Decide What’s Right for You to Outsource
When it comes to outsourcing, here’s how we recommend you think about it: Don’t reinvent the wheel in-house if someone else can do the same thing for you affordably in an outsourced role.
This is especially true if it would take significant resources to accomplish a task in-house, or the work being done doesn’t speak to your skill-sets in-house. If you’re not a web designer, odds are you can outsource your website’s design much more efficiently and cost-effectively by working with a freelance designer than if you tried to scramble something together yourself
When your business starts growing and there’s more and more to do, a good outsourcing exercise is to write a list down of everything you need to do to run and grow your business. What are you good at? What absolutely needs to be done by you? Those are the things you probably can’t outsource (or at least just yet). The other tasks and responsibilities you can start outsourcing.
Outsourcing vs In-House: What to Keep In-House
Now what to never outsource, if possible.
Especially for technology start-ups, outsourcing product development and software engineering can be a huge mistake—especially if that’s core to your product or service. Your technology will likely need constant reworking, and you want a team that’s all in and completely focused on what you’re doing. Key business product decisions should be made in house.
It’s also never a good idea to outsource customer service. Customer service is crucial for growing your business, and you need to keep a monitor on it. For both of these, the DNA of a company and its vision will come through in the product and service, especially how customers feel treated. Outsourcing customer service leaves you exposed to the risk that the service firm you’re using doesn’t share the same values as you do.
Choosing When to Outsource: The Bottom Line
As the CEO, do as much as you can from the start. You know the vision for your business, so the first steps are yours to take. Plus, you’ll learn what you need in an outsourcing scenario much faster by doing the work yourself first.
But as you grow, start to interview yourself for the different positions you see shaping inside your company. Literally. Sit yourself down in a chair, put an empty one in front of you, and ask yourself the questions:
Experience. Education. Objectives. Etcetera.
Objectively, if you wouldn’t hire yourself for that role, it’s time to break the good or bad news. Fire yourself from the things you’re worst at first. These are the things in which you have literally no experience or skill. Someone else (ideally an outsourced freelancer, contractor, or consultant can do this better than you. Next, fire yourself from things you like the least. These tasks will drain you, and as a small business owner you need all the mental energy you can get. There are other important things you should be doing, and ideally, you should like doing them. Finally, move into the role that suits you best and only you can do—keep those in-house, outsource the rest.
Be the CEO from any position.
CEOs can lead from any position or any division in a company. A rockstar at marketing can be the CEO. The head of engineering can be the CEO.
It’s all about finding what they excel at most—their personal sweet spot. Then focusing on the strategy and leadership that your business needs.
However, every CEO must be an excellent salesperson—not just of the product or service, but of a phenomenal vision that will attract the best team members to join the company and build around.
It matters who you outsource to.
Whoever is hired at a company from the start will dictate the future of those recruited. Start high. Start with the best. Even when desperate, don’t compromise.
By following this formula, CEOs can expertly wear the HR hat too, until they find the perfect fit to replace them. In-house, of course.
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