Business Tips

Why Outsourcing Makes Sense for Startups

Ben Conde
February 15, 2017
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As a startup founder, there's nothing more exciting than getting your new venture off the ground. But even when you do, there's one concern that's likely to give you a few sleepless nights: keeping your budget under control.A new startup faces a catch-22: the need to invest in and develop the business even though there's not much money coming in. But there is a way to benefit from the expertise you need without breaking the bank: outsourcing. Outsourcing is simply contracting key tasks out to external suppliers, and startups aren't the only companies doing it. According to Statista, the outsourced services market was worth US$88.9 billion in 2015. Looking at it from another angle, recent research shows that freelancers make up a third of the US labor force and this is expected to rise to half by 2020. In fact, freelancer numbers are rising worldwide. Together, these statistics mean that outsourcing is a sound business and financial strategy that more startups should consider. Let's discover why, what, and how you can successfully outsource.

5 Benefits of Outsourcing for Startups

Outsourcing has significant advantages for cash-strapped startups, let's discover here below 5 good reasons to do so.

  1. Avoid long-term commitments
  2. Having to make a long-term deal with a vendor when you don't know what next month's income will be is problematic. When you outsource, you can avoid potentially unsustainable commitments in favor of short-term or one-off arrangements that let you  pay for services when you have the budget.
  3. Keep more money in the bank
  4. One big difference between freelancers and full-time employees is the overall cost to the business. Freelancers usually cost less than employees, as you don't have to pay for payroll taxes, health insurance, workers compensation, unemployment insurance, sick days, pensions or vacations. Use this calculator to see how much you could save. As long as your freelancer really IS a freelancer, you should be fine, but check up on IRS rules to be sure you're on the right side of the law.
  5. Reduce risk
  6. Any HR specialist will tell you that it can take a while to get rid of an underperforming employee (who will be costing you business the whole time). And if you have a binding long-term contract with a service provider, it can be difficult - and costly - to get out of it if you need to. Outsourcing reduces that risk, especially if you opt for short-term arrangements while you see how a freelancer works. If you're unhappy or your budget changes, you have no obligation to hire them again beyond the original contract so if you need to change your working relationship it's a whole lot easier.
  7. Increase efficiency
  8. As a startup founder, it's unlikely that you're an expert in everything, so stop trying to do everything. It's inefficient and won't help your business in the long run. Outsourcing lets you fill the gaps by hiring freelancers who are experts in the key tasks you need, so you can focus on what you do best.  As co-founder Ed Reeves comments in an article on Inc: "Creating new products, developing your service, improving your scalability... those are efforts definitely worth your time. Taking care of paperwork, sorting out payroll problems,
    making sure your website is SEO optimized
    , or designing an advertisement are not."
  1. Focus on growth

All these benefits add up to more spare cash for your startup because your income isn't tied up in unsustainable long-term arrangements. That means you can invest more in the business and help it to grow. An Entrepreneur article cites the example of The Small Office Assistant. When its president started outsourcing, revenue actually doubled.

What Can You Outsource?

So how do you decide what to outsource? These days, there are more and more tasks that qualify, as technology allows freelance professionals to work from anywhere in the world. According to one Forbes contributor, consider outsourcing any task that:

  • Can be done virtually
  • Needs little human interaction
  • Is web-driven
  • Should be done by someone else

Areas to consider outsourcing include:

Let's face it, you don't need to book your trips and type information into online forms yourself if you can get a virtual assistant to do it for you. You can also get outsourced personnel to make sales calls so that you can generate more leads for your business. And with most things running in the cloud, managing IT externally puts the headache of keeping things up to date in someone else's in-tray. For jobs like these, outsourcing makes sense.But there are two important caveats. First, there may be some tasks you don't enjoy doing, but not wanting to do a job isn't enough justification for outsourcing it. If a particular function is a core part of your business, you need to stay in control. Second, don't outsource anything that can compromise the security of your customer or business data.

5 Steps to Successful Outsourcing

If you've decided that outsourcing is for you, here's how you do it successfully.

Step 1. Find the Right Freelancers

One of the secrets to successful outsourcing is finding service providers who can work effectively with your company. You need to know you can trust them and that they will keep your reputation with your customers intact. Here is how you can proceed within Fiverr's marketplace.Finding Freelancers on FiverrTo find a service provider on Fiverr, type the keywords for the service you are looking for into the search box.

Fiverr Search bar

Once within the sub-category of your choice, use the filters in the left column to refine by delivery time, seller level or language just to name few.

Fiverr Logo Design Freelancers

Check out the profiles that catch your eye, then move to step 2.Tip: Another place to find freelancers is a technological university such as the Massachusetts Institute of Technology.

Step 2. Check Their Credentials

The next step is to whittle down the list of people you found to the ones you want to work with. Depending on the method you choose, options for this include:

  • Looking at star ratings
  • Number of reviews received
  • Numbers of orders in queue
  • Number of revisions offered

Those are all information that will help you find the right person to outsource to.

Step 3. Put Processes in Place

While you'll be working with an expert, you'll need to be organized before you can hand things off to your chosen freelancer. For example, if you're working with a virtual assistant, you'll need to work out templates for letters you send out regularly and rules for what communications should go out when. And if someone's looking after social media communication, you'll need to talk about your brand voice, tone and the type of content that's appropriate or inappropriate. The right professional will have constructive suggestions, but you still have to set the direction and make the final decision.

Step 4. Set Expectations

It's important to be clear about the level of service you expect. If you're getting someone to create an infographic for you, it's reasonable to want the provider to make it fit with the look and feel of your brand and reflect the quality your customers expect. If you're getting someone to do research for you, you'll want it to be up-to-date. If someone's managing your social media marketing, then you'll want to see a steady increase in engagement and fans. The clearer your expectations are, the easier it is to ensure they are being met.

Step 5. Stay in Control

It's important to recognize that outsourcing isn't a set it and forget it proposition. Someone in your company still needs to be responsible for working with any freelancer and ensuring that they deliver what they are contracted to do. That might be you, but more likely it will be someone else in your company (assuming there are a few of you). Freelancers need someone they can get answers from if there is an issue, so make sure it's someone who has time to stay in touch.

4 Influencer Marketing & Blogger Outsourcing Case Studies

As mentioned earlier, Fiverr can be a useful platform for startups to find freelancers, with the added advantage of keeping costs ultra low. Chances are you'll pay more than $5 a pop, but it will be less than you'd pay to a big agency or an employee. Fiverr services providers are looking to grow their business and tempt you into taking higher value services, which means you generally get excellent work for very little money.Many entrepreneurs, start-ups and small businesses have used or suggest to use Fiverr to handle different digital marketing tasks. Here is a small selection we found browsing the web..

  • Ryan Stewart claims to save more than $6642 a month by outsourcing certain tasks to Fiverr
  • Backlinko's Brian Dean also cites Fiverr as a place for getting help with inbound marketing and programming & Tech (see the comments to this article)
  • Nick Haubner of LeapTribe talks about using Fiverr to get graphics, infographics, voiceovers and more.
  • Neil Patel suggests to hire a Fiverr freelancer to help you create your podcast audio intro

Final Word

As you can see, outsourcing is a viable option for startups, helping them to keep costs under control and, as a result, invest more in their business. Follow the steps outlined here to make outsourcing work for you and see what marketing and other tasks you can outsource on Fiverr.How do you use Fiverr and the Gig economy to outsource? Tell us in the comments below!

Ben Conde
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