During the first days of your startup’s life, your team may be comprised of just you and your business partner. Together, you successfully start putting together a product and acquiring a few customers. However, as you scale, you may need additional help with different parts of the business and depending on funds, you’ll need to decide whether to add someone to your staff or outsource the pending tasks. Sometimes too many hats is truly too many.
Certain labor-heavy tasks like product development, web design, and content creation can be time-consuming if your team isn’t skilled in these areas. Finding a firm that can develop your ideas in a timely, yet precise manner can help you grow your startup more efficiently. However, be careful as to who you bring into your company, even if it is temporarily.
“It’s very key when you do outsource, to vet the firm before signing a contract,” says CPA Brad Ebenhoeh, managing partner at startup-focused South Carolina firm Accountfully. “Try to get some references and referral from them as well as make sure to interview a few of them to find the right fit. Because that’s going to be where your biggest money is spent, so you don’t want to waste $100K.”
Ebenhoeh breaks that which industries you should consider outsourcing in those early days and what you should do in-house no matter what.
Sales
You should never outsource sales until you’re over $25K in revenue or have received sufficient funding. In the early stages of a startup, the CEO or the founder needs to be the one wearing the sales hat and championing your app or product. As a leader, the CEO needs to be the person that’s selling the story, selling it to investors, selling it to customers. So, if you outsource that too early, you risk a really inauthentic feel when selling the concept, especially when you’re in a free revenue funding mode.
If you do bring somebody in-house, as an employee, then they can make connections, reach out, go to trade shows, and support the CEO in that sales position.
Operations/Product Development
Operations can include design and development of the actual app. In the best-case scenario, the actual founder might be a programmer and can actually do the work. However, this is where your actual first outsourcing decision might have to be made. You can try to recruit somebody who has a programming background and add them to your staff as CTO and co-founder or you can outsource it. This is a good part of the business where you can feel comfortable dealing with an outside firm as long as funds allow.
When thinking of outsourcing development, costs can vary depending on how complex your product is. Often companies choose to do a mix of the two — in-house and outside dev teams. In this case, each team works on a separate part of the product. For example, the in-house team works on an iPhone version of the app while the outsourced team works on the Android app. It can lead to faster releases and viable products to show investors and gather attention from customers.
Marketing
Once your product is viable and ready for the world, setting up a marketing and PR plan for customer and media reach is essential to get noticed. You can outsource this content to an outside marketing person to help you in that space. Depending on your needs, especially if you’re a B2C company, your costs will be between $500-$3K a month. Marketing is more of a subset and support role for sales in general, so that’s why sales can still stay in-house with the CEO. If you do the marketing right, including social media, blogging, and content, then it’ll help that sales process go forward.
Accounting
Once you pass the $250K threshold, you need to start looking at accounting functions, in-house or with a separate firm. This is where you can easily go ahead and begin outsourcing to an accounting firm for $500-$1K to get your financial reports and books set up, implement payroll for your company, and help pay your bills. These reports will come in handy when investors ask for your KPIs or current cash flow status.
Do you know your startup’s Key Performance Indicators (KPIs) or Cash Flow Metrics? Here’s what to keep in mind during those early stages when impressing investors is top priority.
