Outsourcing an online service business from the start?

[Guest24480]

I've been looking into the online service business model and want to start something along those lines. I like it because it isn't super capital intensive (well, depends) and it can be outsourced and scaled that way.

I just have a few concerns that hopefully someone can shed some light upon.

For the sake of putting it into perspective, let's say my model is to provide graphic design services for other businesses (this isn't my actual idea, but it's similar). Since I'm no graphic design expert, I would have three options from the start (correct me if I'm wrong):

1) Learn graphic design and get good enough to sell my skills (and trade my time for money, eek!). This may take years!
2) Outsource the design aspect and focus on getting/keeping customers.
3) A happy medium - learn a bit, then outsource.

My gut tells me that I would be better off outsourcing for obvious reasons. But this brought me to another road block. How would I go about the outsourcing process from the start?

Surely I can't just find a customer and then go straight to Upwork and hire out a new developer for every single order. Won't the process of hiring a freelance developer take time and leave my customer waiting for their order? Couldn't my customer just do the same thing I'm doing in the blink of an eye, or do they have better things to do?

So I guess my only option then would be to hire someone part time who will be ready when I get that first order. At least, that's the conclusion I came to. I'm still unsure of myself though.

Hmm, or maybe I can go into a niche that is easy to learn such as market research services for businesses and start out doing the work myself. Then when I establish a larger customer base and run out of time to complete the work myself, I begin to oursource.

Am I worrying about the future too much? Should I just be focusing on getting that first customer?

This post is kind of a brainstorm in a way but I just wanted to get my thoughts down and see what people have to say. I like to ask a lot of questions, but I make sure they're not black and white like 'where do I register my business???' Thanks!

 

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[Kingmaker]

1) Place 3 orders with 3 prospective freelancers.

2) Pick one who the best turnaround time.

3) Find customers and quote them double the turnaround time (in case of F*ck ups).

Am I worrying about the future too much? Should I just be focusing on getting that first customer?

Yes. 90% of your time should be spent selling if you are outsourcing.

 

[Guest24480]

1) Place 3 orders with 3 prospective freelancers.

2) Pick one who the best turnaround time.

3) Find customers and quote them double the turnaround time (in case of F*ck ups).


Yes. 90% of your time should be spent selling if you are outsourcing.

Hey thanks for providing some insight. I apologize for the delayed response.

What you said makes a lot of sense. It's sometimes difficult to wrap your head around what to do first. I'm in the research stage of this type of business right now and I'm going to go for it. I seriously think it's such an underrated model. It's not pretty, but it has a potential for scale and a low start-up cost like I said.

I'll let you know how it pans out. I may make a progress thread down the line but I won't do that until I actually have paying customers.

 

[welshmin]

Hey thanks for providing some insight. I apologize for the delayed response.

What you said makes a lot of sense. It's sometimes difficult to wrap your head around what to do first. I'm in the research stage of this type of business right now and I'm going to go for it. I seriously think it's such an underrated model. It's not pretty, but it has a potential for scale and a low start-up cost like I said.

I'll let you know how it pans out. I may make a progress thread down the line but I won't do that until I actually have paying customers.

I am thinking of a similar model, with a focus on creating leads (marketing > selling). What's the most important thing for a business? Cash Flow. Cash flow comes from Revenue. Which comes from SALES. If you don't sell you don't survive.

Now if you can specialise in one thing or another, you can either form a partnership, or joint venture of some kind to do what you can't and focus on what you do best. If you bring in leads, then what you do is VALUED. And essential. If you are outsourcing the actual task, you have a business.

Focus on 80/20. If you are not good at design then find someone to design for you. If you are not good at sales, but are good at design, then reverse it.

What can you do better than most people on earth?

 

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[The-J]

I do that (not graphic design, but similar) and the plan was NOT to outsource from the beginning. Yet, it's happening.

I found that my role as a consultant, a sort of partner, a helper, was more valuable than being a builder of solutions. I found that even though I make money based on the work the team does, I build relationships based on what I can teach the client. Naturally, I'd want to spend as much time doing that as possible.

As far as your situation, you have to understand that when working closely with businesses (especially if the solution takes weeks to implement), you have to be a guiding force for the decision maker(s). For this reason, outsourcing is OK, but if you're selling based on the quality of your work, then you're putting yourself at risk.

Also: I hope you like project management, because you're gonna be doing a lot of that.

 

[Guest24480]

I am thinking of a similar model, with a focus on creating leads (marketing > selling). What's the most important thing for a business? Cash Flow. Cash flow comes from Revenue. Which comes from SALES. If you don't sell you don't survive.

Now if you can specialise in one thing or another, you can either form a partnership, or joint venture of some kind to do what you can't and focus on what you do best. If you bring in leads, then what you do is VALUED. And essential. If you are outsourcing the actual task, you have a business.

Focus on 80/20. If you are not good at design then find someone to design for you. If you are not good at sales, but are good at design, then reverse it.

What can you do better than most people on earth?

Yeah so I guess there are 2 similar but slightly different approaches you can take.

You can A). Build your own team of talent from scratch to outsource skilled (or menial) tasks and focus your efforts on client interaction. This is what I was going for in my OP.

Or B). Partner up with someone or another business where the product/system is already set up for you and use your skills to bring that business revenue. For example, the fastlane-type sales as discussed in Uber's thread.

I do that (not graphic design, but similar) and the plan was NOT to outsource from the beginning. Yet, it's happening.

I found that my role as a consultant, a sort of partner, a helper, was more valuable than being a builder of solutions. I found that even though I make money based on the work the team does, I build relationships based on what I can teach the client. Naturally, I'd want to spend as much time doing that as possible.

As far as your situation, you have to understand that when working closely with businesses (especially if the solution takes weeks to implement), you have to be a guiding force for the decision maker(s). For this reason, outsourcing is OK, but if you're selling based on the quality of your work, then you're putting yourself at risk.

Also: I hope you like project management, because you're gonna be doing a lot of that.

Your last paragraph outlines my concerns perfectly. This was where I hit a crossroads in my research. Do you go for something that's easy to grasp, or do you need extensive knowledge in it even if you're outsourcing? Surely in the name of quality control you should at least be proficient.

On the contrary, there are a handful of unskilled services that businesses will always need done but never be willing to hire full-time employees for. Maybe this could be an area to focus on for people such as myself who aren't particularly advanced in a certain field.

 

[nradam123]

I am doing things myself at the moment because
1) I do not want to skip process (As a coder/designer there are so many things you will learn only if you face problems yourself)
2) If I outsource at my current rate I wont be cash positive.

But once I get steady business I am outsourcing, thats for sure.

Anyway you should check out the following links -
https://www.thefastlaneforum.com/community/pages/learn-to-code/
https://www.quora.com/How-important...ounder-of-a-tech-business-to-know-how-to-code (The first reply is by founder of Wikipedia, so its someone who you can actually take advice from)

CLIFF NOTES FROM QUORA -

I think it is very important but not absolutely mandatory. One thing is for sure: you don't need to be the best coder in the company and if you are, then you've probably devoted a huge portion of your life to getting good at that and need to recognize that there are other skills that are more important for a CEO. The reason I say it is very important is that even if you are a mediocre coder or a bit rusty, by being a coder you will have a keener appreciation for what is possible (and, importantly, what is not possible). You'll be better able to understand what engineering resources are needed or not needed at your particular stage of development.

In the early days of Wikipedia we used an open-source wiki system called UseMod. It stored the articles in flat text files. The search engine was essentially 'grep'. I wrote the first search engine for Wikipedia by using BerkeleyDB and a very simple idea of relevance (probably word count or rare word count or something - I don't remember now). It wasn't very good but it was massively faster and better than what we had before.

And I was able to build it myself. We didn't have the resources to do much else at that moment in time. Nor the time. It was a bandage but it was a bandage that worked.

It isn't absolutely mandatory for a start-up founder, but if you do nothing more than sit down for 2 hours a day for 2 months working through a few books on PHP or Perl or Python, you'll be well served.

 

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[The-J]

Your last paragraph outlines my concerns perfectly. This was where I hit a crossroads in my research. Do you go for something that's easy to grasp, or do you need extensive knowledge in it even if you're outsourcing? Surely in the name of quality control you should at least be proficient.

I freelanced for a few years before going ahead with building a small agency. Having a slightly-higher-than-novice level of proficiency in what you actually offer might save your a$$ when one of your employees F*cks up. It saved mine.

The most important part is a full and well-managed pipeline.

 

[Chris Kelsey]

I started an app/web dev agency when I was at the end of 2014 when I was 17 and we're at over 40 people now (although we're not quite an agency anymore).

My biggest recommendations are:
1. Make sure that the people you're working with know what they're doing. I recommend giving a test project beforehand to be 100% safe.
2. Don't be afraid to ask them HARD questions. You want to see how they respond and if they're being honest. There's freelancers from China that pose as white people from the USA and I would always ask things about where they live etc. and say something like "Do you live in X or X district" (two places that don't actually exist) and they will pick one and I know they're lying. AKA you can't trust them enough to hire them.
3. Give them strict deadlines that make it 100% clear that if they mess up, they will not work with you again.
4. Get someone else that is a developer to give code reviews and such (someone that you can trust) so that you know the code isn't just copied and pasted from somewhere or that they're BSING you. For example, some developers will say this or that is taking too long to fix when really they're working on other projects and just not telling you. You have to be FIRM with them, but still nice.

Eventually you will have all of your systems in place and everyone will know exactly what to do, and then there will be the day where an entire project was completed and you will look back and feel so proud of yourself for assembling a team that builds cool things.

Once you vet them properly and have them on your team eventually full-time, take care of them very well - they will save you a LOT of hassles.

 

[welshmin]

Yeah so I guess there are 2 similar but slightly different approaches you can take.

You can A). Build your own team of talent from scratch to outsource skilled (or menial) tasks and focus your efforts on client interaction. This is what I was going for in my OP.

Or B). Partner up with someone or another business where the product/system is already set up for you and use your skills to bring that business revenue. For example, the fastlane-type sales as discussed in Uber's thread.



Your last paragraph outlines my concerns perfectly. This was where I hit a crossroads in my research. Do you go for something that's easy to grasp, or do you need extensive knowledge in it even if you're outsourcing? Surely in the name of quality control you should at least be proficient.

On the contrary, there are a handful of unskilled services that businesses will always need done but never be willing to hire full-time employees for. Maybe this could be an area to focus on for people such as myself who aren't particularly advanced in a certain field.

I suppose that they are two ways of starting a Cash Flow business based on a service offering. Good way to sum it up. You can either learn the skill and offerr it yourself (more profitable at first but not scalable). Or you can outsource it (scalable, quicker, but other head aches involved).

If you think about this, it's necessary to scale the majority of businesses in the same way? By delegating or outsourcing

I am doing things myself at the moment because
1) I do not want to skip process (As a coder/designer there are so many things you will learn only if you face problems yourself)
2) If I outsource at my current rate I wont be cash positive.

But once I get steady business I am outsourcing, thats for sure.

Anyway you should check out the following links -
https://www.thefastlaneforum.com/community/pages/learn-to-code/
https://www.quora.com/How-important...ounder-of-a-tech-business-to-know-how-to-code (The first reply is by founder of Wikipedia, so its someone who you can actually take advice from)

CLIFF NOTES FROM QUORA -

Wow that was an interesting read from the founder of wiki. Never would have expected to see him on quora!
You are probably right, as is he. By learning the process yourself you will do better in the long term. By having an understanding and appreciation of the job. You can say you've been down in the trenches, you've done the job. And you know, to one extent or another, exactly what needs to be done. Eventually you will be unable to keep up as new knowledge and skills grow and you transition to a management/sales only role. But I know I would certainly feel better as a freelancer if the person I worked for had been where I was and knew the lingo and what is required.

This is an excellent strategy if you are focusing on one specific niche, e.g. web design, logo design, content marketing, landscaping, carpet cleaning, etc.

Keep it specific, learn the trade, sell sell sell, outsource when able to and focus on the 80/20.

 

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