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The Fully-Outsourced Start-up
 

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An entrepreneur is fundamentally an organizer of labor and capital for an enterprise. But that doesn't need one must build an organization in the traditional sense. There are many businesses that do millions of dollars in revenue with no capital in place, no employees, and no facility. In the era of outsourcing, starting a so-called hollow company is a fairly low-risk way of becoming an entrepreneur.

So how to begin? I blogged earlier about the importance of the one pager. Once you have crafted that marketing document, your sole priority should be to go get a sale. You have to be convincing, of course, but I have seen many entrepreneurs make their first sale without so much as a prototype. By making a sale, you have done the most important part of a business by showing that at least one company wants your product.

Once you have a sale, you can move on to the next step and find a manufacturer that will do all the work. There are thousands of these small-batch manufacturers out there that are constantly looking for new products that they can make and sell.

With a manufacturer signed on, your next step should be to establish a sales organization. Rather than hiring, I would advise you to stay hollow and look to the outside. There are many independent sales organizations employing thousands of reps, and they are always looking for a new product or service to represent. Rep firms work on a commission basis, so they only get paid when you do. This is the way Atari grew so quickly. We simply put on a rep force and we had instant worldwide coverage.

As your organization makes more and more sales, there are accounting groups that will take care of billing and cash flow and bonded warehouses if you want to start to hold inventory. You can work with all of these companies on a contract basis. The truly hollow company need never hire anyone. Employees only complicate things. And since you now have nothing to do yourself and no one to manage, you can then turn to the really interesting work, like thinking about expanding your product line to grow even bigger.

Last updated: Oct 8, 2009




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