Many entrepreneurs start their business with the admirable goal of conserving cash through doing everything themselves. While not burning cash for no good reason is critical to pre-revenue businesses or those looking to bootstrap, it can also lead you to do things you may later regret. The sooner you work these issues out and adjust your budget, mindset and business plan, the better.
1. Time is more valuable than money.
Chad Sandstedt, CEO of TagniFi, concisely identified this truth. No amount of money gives you more time, so in running your business you need to spend the time doing the things where you derive value for your business. Of course you can potentially do everything yourself, with time, but by then you may well have missed your opportunity. The link between time and focus on your core is made over and over, and finding partners that can speed up your ability to deliver all the other things is critical to a successful outcome.
"In our case we're aiming to be the best in the world at delivering financial data. Anything that distracts us from that activity is putting our goal and company at risk. At the end of the day, if you are the best in the world at what you do, other companies will make the same decision to hire you for your core competency instead of doing it in-house. The result is an economy where only the best survive."--Sandstedt
2. Parts of many processes can and should be outsourced from day one.
As an outsourcing business leader I preach this daily, and I constantly see the positive ROIs even the smallest firms get from this. If we are honest, most of us never get more than 1/3 of the way through our priority lists. Many of the things further down there have a lot of value we simply cannot unlock. Getting someone else to come in and project manage them for you, even if the only cost saving is your time (see above) to get them done is enough to consider them. If they are not your core competence, you will likely not do them as well as you could, further reducing the ROI of doing them yourself.
Getting experts to work on your data processing and analysis for example, can really speed up and improve internal decision making. Many of the world's largest companies offshore this work at scale to offshore captive operations. For smaller volumes there are tools like ODesk for small and simple, or plenty partners willing to help once you get a little more volume of data.
CRO Garrett Brown of Bitium acknowledges the value of this:
"At Bitium, we collect data around everything--product usage, sales predictions, marketing campaigns, etc. We often have more data available through our various systems than we can reasonably organize and manage for specific projects. We have used tools like Odesk to get help with data clean-up, finding supplemental/supporting data, and organizing data, allowing us to spend our time and energy on analyzing it and putting it into a consumable format that lets us improve our product and operations."--Brown
3. You can't build a great business if you ignore key disciplines.
Legal. Finance. Marketing. Sales. IT. Support. Most entrepreneurs are not excited by these and they are not generally why they got into business in the first place. And if by any stroke of fortune you have enough skills in your founding team to cover some of these off, then congratulations. You will, though, most likely need external help to achieve acceptable performance and results in all these areas.
Some businesses start off without fully thinking them through and either make some bad decisions (starting relationships on trust over legal footing being perhaps the most egregious) or end up having to backtrack at a greater future cost (such as not building processes for capturing and managing revenue and clients, leading to the need for expensive and time sucking financial work).
Often sales channel development is deferred. Companies head down a route of building a product or service with a price and feature set they have not properly market tested. If they have tested they may not have thought through the execution plan for hitting their revenue goals. The question then becomes who is doing what once the product is completed and ready for prime time?
Thankfully there are solutions out there that while not free, can supplement your core team without needing to hire a full time resource to your new team for every one of these areas. And it is not just lawyers and CPAs you can make use of. Advisers, consultants and partners exist for all these disciplines.
At Enshored we have legal, finance, HR and IT specialists on retainers in each of our operating markets. We have made a strategy of using a fraction of a high skilled person rather than recruit full time but more junior people for these positions, and feel it has been a great strategy given at our stage of existence our needs and priorities continue to evolve and change from month to month.
SaaS platform for the mining industry Digiscend goes one stage further. CEO Miguel Enriquez acknowledges that the global nature of their business would make it hard to build a direct sales team with all the language skills and local market knowledge to sell into Latin America, Australia, Africa and SE Asia:
"it is clear that the best option is to look for the support of a company (partner) capable enough to do this (run our sales) while letting the Digiscend team keep focused on product development and implementation of customer feedback. It was a tricky decision because lead conversion and revenue generation, activities that can make or break the future of the Digiscend ..., both will be trusted to a Digiscend partner. We understand though that this is the right decision as our eventual partner is expert in delivering this kind of service."--Enriquez
It is great to build a business with an eye on costs, and to get you started you may need to convince yourself that it will cost less than reality will dictate. Shifting that mindset away from the negative connotations of cost to something more positive such as value or return can really liberate your thinking and improve your chances of success.