In the early days of a startup there is a temptation to do it all yourself, and indeed budget restrictions can make this a necessity. But increasingly small businesses are choosing to outsource business services including accounting, HR, legal services and PR.
According to Emma Jones, the founder of Enterprise Nation, this makes business sense. "Focusing on what you do best and outsourcing the rest is the best way to grow," she says.
She cites outsourcing as a route to finding the best talent and not having to spend too much time on managing and motivating as partners, suppliers and freelancers do a good job for you, knowing their own reputation depends on it.
"We are seeing businesses increasingly outsource to manage costs and surround themselves with a top team of freelancers and experts," she says.
Networking with other entrepreneurs will often throw up a few recommendations for reliable and good professionals. Failing that, talent marketplaces such as Elance, ODesk, Freelancer and Peopleperhour.com are great sources of professionals.
Outsourcing to the experts
Some areas of running a business are obvious contenders for outsourcing, as they require expert knowledge. Tech business Night Zookeeper outsources accountancy, covering the submission of annual returns to Companies House as well as reporting to investors and PAYE. They also help to register for tax incentives and tax credits.
A legal firm looks after investment documents alongside any submissions to Companies House and helps with revising contracts. "We are a small company and we don't have the legal expertise to get through big complex documents that often come with big deals," says CEO Joshua Davidson. "Having the legal support to read those documents ensures we don't make any bad deals."
Night Zookeeper has also experimented with using a freelance project manager to oversee a big project. "It coincided with me raising investment – many founders and CEOs spend so long fundraising and often they need support around them just to keep everything working efficiently," he explains.
Outsourcing creative work was harder. "The sound design was harder to do because it is part of the brand, part of who we are, but that means you have to create an amazing relationship with the person you are outsourcing to. Treat them as if they are part of your company and hope that they care as much," he says.
Good for growth
Some businesses find that trying to do everything themselves genuinely hinders business growth. This was the case for Robert Welch, the founder of Mini tour company Small Car Big City.
"We had no money to invest in people or technology, so I just did it all myself. Although it did allow us to keep costs down and get into profits quicker we had to sacrifice growth," he explains. "If we had gone down the investment route – started out with £100,000 or £200,000 to invest in - then I could have bought all this outsourcing straight away and created a relatively sound business model that was capable of expansion quicker."
But Davidson points out that trying to do it all was a vital part of starting up. "It certainly helps at the beginning to go through that process, as painful as it can be for some more creative entrepreneurs, but it was crucial learning," he says.
Having learned his lesson, Welch has gone on to outsource pretty much all of his business, moving it into the cloud so all parts can be accessed from anywhere. "We live in a technological world – there is no need to have a team of 20 people on £30,000 a year. If the majority of your problems can be pigeonholed into a certain box you can outsource it for a tenth of the cost," he says.
No-go areas?
But there are limits, even for Small Car Big City. Welch has decided to keep bookings and customer relations in-house and answers all queries himself. "I am so phobic with the way my product is presented that I don't want to outsource it out. I am selling a quintessentially British experience, and I can't have somebody outside the UK answering phone or email. People come back to us because every single email has been replied to quickly by a human being with perfect English," says Welch.
What about social media? "At Night Zookeeper we do our own social media and customer service. It just gives you that accountability. And the learning is valuable as a startup — you have to go through that process," says Davidson.
For Small Car Big City there is no going back now. "I have time now, where before I had not time at all. My main function in business is business development and growth and I was spending all my time being reactive rather than proactive," he says. "I was so bogged down with making sure that my business was legal and functioning that I had no time to grow it."
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