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The Best Startup Strategy: Opportunity Costs of Outsourcing vs. DIY

Posted by Samantha Black to Business

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Starting your own company in a world where new businesses pop up around every corner is certainly not an easy thing to do. You have to be unique; you have to be innovative; you have to know exactly what your audience wants; you have to know the exact time of year when they are most likely to contact you… The list of things you have to know seems to be endless. Therefore, saying that becoming a fully-fledged business from a small startup is an astonishingly difficult task would be an understatement.


Now, there are a couple of paths you can take. On the one hand, you can be one of those people who say: “If you want something done right, you got to do it yourself!” On the other, you can focus on outsourcing various tasks to people who specialize in handling them.

 

To give you a clear picture about what the right choice is for you and your business, let’s tackle both of these options.

 

Can you really do it all on your own?

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Let’s assume that you’re an esteemed expert in your field and that there are only two people on the whole planet who are maybe better than you. This would be excellent, but would it be enough?


Each and every business venture has to tackle many different issues. You need an attorney; someone who will tackle your legal issues. You need an accountant to crunch the numbers. And let’s not forget the infamous PR management sector. Sure, you can hire experts and keep them on the payroll, but the question is – are you really able to afford all this at the startup phase?

 

 

What are the downfalls of outsourcing?

When it comes to outsourcing, aspiring entrepreneurs are worried that the teams they outsource a certain task with will not be fully-involved in the project like someone who will be right there next to them, sharing their everyday struggles and vision for the future. Also, there is a vast sea of freelancers and freelance teams, and the chances of choosing someone who is really up to the task are slim. So, what should you do?


There is one axiom that remains in every single business venture: time really is money. You don’t want to waste time – every wasted hour is money down the drain. Therefore, your decision should be based on your initial budget.

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If you have the money to conduct interviews and gather a team of people at the very beginning, the choice can be more difficult. However, startups today are under pressure to keep a rather tight, responsible budget Therefore, when they are faced with a project, a new website, for example, they won’t be able to hire a team of developers to work in-house. They would turn to outsourcing, since this would bring them faster results.

 

Recommended Reading: How First-Year Startups Can Build a Useful Business Budget

 

Let’s break it down even more

So, let’s take various customer support-related tasks into consideration. Let’s say that you are building a company that is going to sell certain software solutions. Not all customers will be tech savvy enough to instantly understand everything your solution has to offer. You can be almost certain your inbox will be filled with questions, some of which will be easy to solve, others not so much. When you’re presented with a rather complex question, in order to satisfy your customer (and, remember, we are talking about one customer only), your team may need to dedicate multiple hours to solving that one inquiry.


From that alone, it’s easy to tell that having a small team of people handling your customer support is not going to cut it. And, the more your business grows, the more complex it may get—at scale—and the more people you will have to hire.


According to an article on PayScale, the average pay for a customer service representative in the US is just above $13 per hour. And, this is for one representative only.


Now, if we are talking about outsourcing these tasks, you can look for an entire call center to hire. These companies will take care of everything from answering the phone to replying to emails and live chats, and they will do this 24/7. The best part about this option is that these types of services are scalable, depending on your current needs.


Therefore, you can start with a small, budget-friendly level and as you work your way up the corporate ladder—and as more and more people start buying your software—you can invest more in your outsourced support.

 

Recommended Reading: Should You Outsource Business Burdens? Your Checklist to Decide & Get Started

 

In an article from CostOwl that more or less reiterates the point made above, emphasizes how important it is to find a good and reliable call center service. Be sure you always check their reviews and their work history. When it comes to who handles your customers, search for online reviews you’d like to see of your own service. If you are not sure which one to pick, perhaps it’s best to find someone from your niche who already did this sort of thing, and ask them to recommend someone reliable.


Now, let’s broaden the picture. The same thing that applies to selling software solutions can be said about almost any other type of business. And, what was said about customer support can also be said about accounting and online and offline marketing. Again, according PayScale, the cost of an in-house accountant is close to $50 per hour in the US, and an in-house marketing coordinator takes close to $40 per hour. These are big hourly digits and, as a startup, you are not likely to have this much at the very start.


If you outsource, you can find teams that will cost you a lot less. Good teams won’t be cheap, but more often than not they won’t be as expensive as hiring someone internally.

 

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One last—but certainly not least—important factor when it comes to outsourcing: Today, you can find online platforms that are specifically designed for you to find the right man for the job easily! More often than not, you’ll find someone who will happily do what you consider drudge work for a really reasonable price.


When forming your startup strategy, you should consider outsourcing the tasks that you are not prepared to handle in-house, but try to do this earlier on. Luckily, outsourcing has really developed as a field. Hell, they even have awards for this sort of thing!


As you grow, you’ll expand your team. The road from startup to magnate really is a long one, but it doesn’t have to be painful. In the end, it’s all up to you, boss. Take your time when thinking things through, calculate your time and your money and try not to waste neither. Good luck!

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About the author
“Samantha

Samantha Black

Samantha Black is a Content writer and developer at BackOfficePro. With an endless enthusiasm for writing and demonstrated interest in technology, Samantha loves to research and cover the latest news and events in technology.


Disclaimer: The inDinero blog provides general information about tax, accounting, and business-related topics. It is not intended to provide professional advice. Read more in our Terms of Use.

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