September 28, 2023

An Expert's Guide to Using Operational Outsourcing

Running a startup is like juggling a million balls at once. You're responsible for everything from product development to marketing to customer service. But what if you could outsource some of those tasks to other companies or individuals?

Operational outsourcing is the process of delegating non-core business functions to external providers. This can free up your time and resources so that you can focus on the things that you're best at. It can be a great way to improve the efficiency, scalability, and profitability of your startup.

We sat down with Amy Walkers, the founder of Start Ops, to discuss operational outsourcing in more detail.

What is involved in outsourcing your operations as a startup?

“Transferring the running of your company to someone else can be hard - you're used to doing it all. The most important thing is to find someone you trust, someone you know has done this all before and someone who has a broad range of knowledge who can talk to everyone from lawyers and accountants to your team.

Having a good relationship with outsourcing company is essential. It's important to outline at the start how much contact you want with them, and when, what data you want to see, and what a successful relationship is. Knowing whether the founder wants more time at home, more time with their team or more time to prepare for investment is helpful to know so you know how to make the most impact for them.

Transferring operations from in-house to outsourced just means someone acting on your behalf to do all these things for you. It will involve the outsourced partner having access to internal systems and access to software, and everything should be covered by an NDA, and there may be slightly different processes for that access, but overall it should be seamless and everything should be able to be run smoothly in the background.”

Do you think that outsourcing this function is essential for startup success?

“Many founders/entrepreneurs don't have a background in operations - they usually come from a tech/product/concept background. This means they've not had to do the day to day operating of a company. Often they don't know what's involved, and, most importantly, don't have the time to learn all the ins and outs.

There are so many strands of making a company, you need a broad range of knowledge to correctly implement it all, and it's complex. You wouldn't write the code to your software by learning how to code, so why would you do the same for operations?

Operations for a startup is often an afterthought but it's essential to have everything in place at the start to be legally compliant, as well as for future due diligence while fundraising. Startups don't often need someone full time to manage this but the work still needs to be done, so outsourcing makes sense. This keeps headcount down, as well as reduces costs such as PAYE, seat in an office, pension, benefits and hiring fee.”

What are the biggest challenges that startups face when outsourcing?

“Knowing who to go with is hard, which is why referrals are really helpful for this. It’s important to try and find someone at the right price point for your company, safe in the knowledge that you're getting value for money, but also top-class expertise. Choosing the company based on exactly what you need would be a good start. However, if the founder themselves is not an expert at operations, it does become hard for them to be able to assess whether it's being done correctly, which is the reason they wanted to outsource in the first place!

Flexibility and agility would also be another challenge. The outsourcing partner has to be flexible enough to move with the company at the pace that's needed. They have to match the style of working that you as a founder have adopted and built within your team.”

How can startups overcome these challenges?

“Two way communication is key in order to build trust as the basis of the outsourcing relationship. Setting clear goals about communication (how, when, where) and what the founder wants to know should be a priority.”

What are the most important factors for startups to consider when choosing an outsourcing partner?

“Looking at their background really helps - does your outsourcing partner have experience in managing everything you need them to? Ask a ton of questions to ensure you get closer to the perfect match for you. Does their price point work for you? Does their price point reflect their experience so you're getting value from that? Are they flexible and agile to meet your company's changing needs? Do they have good references? Have they been referred? Do they instill trust? Do you want to work with them?”

What are the biggest mistakes that you’ve seen founders make when outsourcing?

“There's a couple of common mistakes I’ve seen throughout my career. Going for the cheapest is definitely one of the biggest. They say ‘buy cheap buy twice’ - cheapest might be good for the bank balance but if you're not getting the work done correctly then the time, cost and effort to correct things will be more. Valuing and understanding what your outsourcing partner is worth is essential. They are experts in their field and have built their experience, career and knowledge over time. This expertise is yours to benefit from, but founders need to step back and understand their potential. Many founders rush in, without taking the time at the start to define what the company expects, and needs from a new partner.”

How can startups ensure that they are getting the most value from their outsourcing relationships?

“I think setting the success criteria is essential from the start - what does the founder want to achieve with this relationship? How much is that success worth to them? It might not be in monetary/revenue terms, it might be in their personal relationships at home or with their team. Outsourcing is designed to solve a problem - whether that's time or cost, or both. Regular check-ins should be built into the relationship/partnership so that both sides have full transparency on ongoing issues, changes, and updates.”

Do you think that operational outsourcing is a threat to jobs?

“No, because the jobs are created elsewhere at the outsourcing companies.”

How can startups use operational outsourcing to create new jobs and opportunities?

“I am planning to hire people in my company - I will eventually need account managers, accountants, HR consultants, general operations hires to make a full scale operations agency. I also want to be able to employ people coming back from parental leave, so they can work flexibly, so that opens up a job opportunities for women/men that might be harder to access in other industries.”

What are the future trends in operational outsourcing?

“I think automation will be huge and could revolutionise operations. There is already so much great software to help with accounting, HR, cashflow and travel. However, someone will always have to operate that software, so having someone to do that who knows what they're doing is going to be really important.”

How can startups prepare for these future trends?

“The same breadth of knowledge will still be needed to manage all this, so an operations hire, whether in house or outsourced, is still essential. They will just have to have different skills to manage all the software.”

Thank you for your insights, Amy.

If you’d like more information on how to successfully outsource the operations of your startup, we can highly recommend chatting with Amy to learn more and get started. Click here for more info or get in touch for a personal introduction.

You're on the list and you can un-subscribe anytime!
Oops! Something went wrong while submitting the form.