7 Key Business Functions Startups Should Outsource
It’s one of the most challenging dilemmas faced by every startup, how to build capability internally while managing the cash burn rate. Increasingly, the answer is to build a two-way relationship with a business process outsourcing partner and to outsource those key business functions, which are not critical to the growth of the enterprise.
If you’re running an early-stage startup, chances are you have developed an organizational roadmap, identified the key knowledge and skill areas amongst your core team and developed a strategy to ramp up your organization’s recruitment strategy.
Why Outsource Key Business Functions
While your team’s strengths may be focused on product innovation or technology, your business still requires solid Marketing, Customer Service, Financial strategy, Human Resources, Sales and Administration expertise.
The question is, “How prepared are you to manage your startup’s day-to-day operations, while onboarding new talent or capabilities and outsourcing business functions?” Effectively outsourcing key business functions enables a startup to be average down its staffing costs while keeping your internal resources focused on business gaps in your organization’s operational ecosystem.
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Pitching a product or business idea to venture-capital investors requires a lot of courage and conviction. It also takes a significant amount of work, time and networking to get a meeting in the first place. Once you have that opportunity in hand, you don’t want to waste it by delivering a subpar pitch presentation, one that lacks a compelling story. Without that story, you risk failing to convince your investor audience to believe in your idea — and you.
I sat down with Andrew Braccia, partner at Accel and early investor in companies like Slack, PagerDuty, Lynda.com, Squarespace and Prezi (where I am CMO), to get his insights on how entrepreneurs can use tools like storytelling and imagery to engage VC investors during their pitch. He offered a rare glimpse into the components that he looks for when evaluating entrepreneurs and what makes a pitch presentation compelling. He also explained why less is often more when it comes to presenting information to VCs. Here is a breakdown of key takeaways from our conversation, with insights from Braccia himself.
“It depends on the entrepreneur and situation, but you want to make it interactive and give a clear command of the opportunity in an articulate way,” Braccia advises. “You want to make it as engaging as possible so you create opportunities for shared dialogue and questions. It’s a great indicator of the interest level of the receiving party. It sort of makes people buy more into what they’re spending time on. You don’t want to force it or make awkward moments either, or even look for confirmation.”
Use imagery to create an emotional connection.
“If you’re talking about your team, show pictures, [like] the schools they went to, icons of other companies they’ve worked at, their interests,” says Braccia. “Market trends — being able to graph it, chart it, or personify it allows for an emotional connection with the person or market.”
Be open to questions.
As Braccia puts it, “If you don’t have a lot of confidence and are constantly looking for reinforcement, that could be challenging. So you want confidence being able to be open to questions. Coming out with a strong sentence.”
Keep things concise.
“I don’t think length and detail of a presentation is synonymous with the success of that presentation,” says Braccia. “It kind of goes into clarity and their ability to extract complexity. Hold yourself accountable to keep things concise in a presentation or 45-minute discussion.”
Braccia suggestings bearing in mind that, at minimum, “It’s an opportunity to meet investors and influencers who may help you in the future, if not today. And that’s another reason why great storytelling is so important in the VC pitch: It makes you memorable.”
Have your backstory on deck.
“Many entrepreneurs are caught off-guard when asked to dive into their backstory,” cautions Braccia. “They haven’t practiced how to tell that story, or left enough time in their presentation to share that information. And that is a tremendous opportunity lost to make a connection with investors.”
As Braccia’s observations make clear, your VC pitch can be a pivotal moment in your business. Going through the process can help crystallize the story you want to tell, and it’s never too early to start developing that story.
Re-invention can be triggered externally, but must take place internally.Entrepreneurs must develop the power to create the impossible in order to realize their highest potential.
No entrepreneur is happy with maintaining the status quo, even if they’ve achieved success, accolades and comfort from their accomplishments. The “zone of genius” can become a golden anchor.
Most entrepreneurs have a huge vision for themselves that they’ve broken apart and watered down over the years because they are scared of the scope of their dreams. In doing so, they are settling for the smaller incentives that are within reach rather than striving for the bigger prizes on the highest shelves. They stop stretching.
The power to create the impossible is the ability to first acknowledge these huge dreams that feel completely “unrealistic,” declare them possible and then create the circumstances in your life that move those dreams from unreality to reality.
In order to create the impossible, the entrepreneur must undergo a period of complete re-invention in business, life and self — counterintuitively shedding themselves of old beliefs and habits in order to make room for the ideas that will actually help them succeed.
Re-inventing yourself is not about changing what you are “doing” — it’s about changing who you are being.
Re-invention is not a simple as a “pivot” or a new position in the market. It’s not just about doing better work. It’s about changing your relationship to the past, present and future so that you become capable of accomplishing anything you declare possible, regardless of your past or current experiences.
An entrepreneur cannot re-invent their products, company or culture without first re-inventing themselves. It takes courage.
As author Tracy Goss would say, “Re-invention is putting at stake the success you’ve become for the power of making the impossible happen.”
Anybody who seeks the power to create the impossible through re-invention can follow the guideposts until the road ends, but each re-invention is unique. Great CEOs, athletes, artists and world leaders have always endured the fires of change as they re-invented themselves.
You can study great leaders and icons to understand how and why their re-inventions happened — but you’ll never be able to copy the process. Re-invention can be triggered externally, but must take place internally.
Your re-invention will happen through a series of transformations that fundamentally change your understanding of who you are and what you’re capable of, creating quite literally a different person on the other side who has no recollection of the limitations of the past.
This article looks at why customers expect different interactions with you depending on where they are in the buying cycle. It also examines how specific events trigger them into a buying mode. It then explains how you can use this information to make your marketing more effective.
The Customer Buying Cycle
A simple way to look at the buying cycle is to break into three stages:
Awareness – when a customer first becomes aware of your product. Or could also refer to the point where a customer first becomes aware of a need that they want to fulfill.
Consideration – when a customer starts evaluating solutions to their need
How Buying Cycle impacts the sales approach needed
Imagine that you wandered in to a clothing store while walking around the neighborhood. You didn’t have a particular idea of anything you want to buy. You are approached by a hungry salesperson who is convinced they can get you to buy something. You are are annoyed by too much attention, and feel that they are ruining the peaceful browsing experience that you hoped to have.
Now imagine that you have gone into the same store. However In this situation, you have a urgent need to purchase a black sweater, and don’t have much time to waste. You want a salesperson to help you immediately, so you don’t waste your time looking for the item. However you can’t seem to get the attention of any of the salespeople. You are highly irritated by the lack of attention.
What’s the difference?
The difference between these two examples is where you are in the buying cycle. In the first situation, you are early in the Awareness stage, and in the second example, you are right at the end of the purchase cycle.
Depending on where you are in your buying cycle, your expectations for how the sales people in the shop should treat you are different. If you are early in the cycle, you want to be largely left alone to browse around and get educated. If you are later in the cycle, you want highly responsive help to complete the purchase. Using the wrong sales approach leads to buyer frustration.
How do you adapt Marketing to a buyer’s stage in the cycle?
In the online world, we need to provide different paths through the website that are appropriate for each stage. It turns out that visitors will self-identify where they are in the buying cycle by the paths they take, provided you give them the option.
What to do with visitors that are not ready to buy? (Lead Nurturing)
Since visitors who are early in their buying cycle are NOT likely to buy on their first visit to your web site, we need to know how to best handle them in case they do turn into buyers later on. This is a path that I am surprised to see is often not given the right level of attention and results in leads leaking from the funnel and lost marketing investment.
The key is to do a great job of staying in touch with them over a period of time, and building a trusted relationship (Lead Nurturing). Then if they do hit an event that triggers a buying cycle, your product is likely to be the top of their shopping list.
Once we have their email address, we can nurture them through the buying cycle using a customer success stories, a blog, newsletters, webinars, etc.
Lead nurturing is best done with marketing automation software like that provided by HubSpot, Marketo, Eloqua, etc. Those products allow you to segment your customers to make the messages you send most directly relevant to them, and therefore most likely to be read. They also allow you to track who is advancing in their buying process by observing whether they come back to visit pages, such as the pricing page, that indicate buying intent. You can then apply more expensive sale resources to those leads, knowing that they are qualified enough to warrant the additional cost.
Effective lead nurturing is all about accelerating leads through the consideration process. Customer success stories, product comparisons, etc. all help to provide the data and info that a prospect looks for in their own research. If you provide it for them you make it easy for them to consume that info and move to the step in the process.
How on-line lead sources relate to the Customer Buying Cycle
Different lead sources produce buyers at different stages of the customer buying cycle:
People that are later in the buying cycle are most likely to be using tools like Google, and review sites to search for vendors and products to solve a problem. Those leads are highly valued because there is a high level of buyer intent. They are usually in the Consideration or Purchase stages of the buying cycle.
Many other lead sources (e.g. social referrals, Twitter, Facebook ads, banner ads, pr stories, educational presentations at conferences, etc.) produce buyers that are earlier in their cycle, and frequently just becoming aware that there is a potentially interesting product now available.
Market maturity also plays an important role in the stage that your leads. For early stage markets where there is still a lot of education required, most leads will be very early in their buying cycles.
In a growing company, juggling side projects and a full-time job is often frowned upon.
bySam Radocchia, Co-Founder at Chronicled // Blockchain // Forbes 30 Under 30
In a growing company, juggling side projects and a full-time job is often frowned upon.
Everyone is supposed to be focused on one goal and one goal only — building the company. Any work that appears to sway from that overarching goal is viewed in a negative light.
But side projects don’t actually have to steal focus away from the company’s main objective. They can be useful as an outlet for creative energy, as a way to develop employees, and even as a tool to bring in new clients.
It all depends on how you treat these projects. If they’re looked down upon and discouraged, you won’t see any of the benefits.
If leadership embraces the idea of passion projects and offshoots, some spectacular things can happen.
Think of it like a daily walk. It’s comfortable to take the same route every day because you see the same stores, the same people. There may be minor deviations, but usually you know what to expect.
But if you want to see something new, you have to take different streets.
The original path may be trustworthy and dependable, but it won’t ever take you out of your comfort zone or help you see things in a new light. It’s only when you change your route that you run into new people, hear new voices, find new restaurants.
That’s what your side projects are — little side streets that can lead you to new ideas.
Here’s why they’re so important:
Deviating from the norm opens you up to new opportunities.
I’m not advocating you split your attention between multiple time-consuming ventures. Honestly, 90% of your time should be focused on your core business and its requirements.
But sometimes, in order to get where you want to go, you have to take an approach that isn’t totally linear.
I’ll give you an example.
Our team at Chronicled established a company as a passion project called the Blockchain Art Collective (BAC), which is separate from the work we do with supply chains. Recently, we were helping an organization register art and antiquities through the BAC.
And now, that party has expressed interest in using our supply chain capacities to track pharmaceutical drugs — one of our core company solutions.
So what started as a side company ended up bringing our organization business. It wasn’t the most direct route, but it did open up an opportunity we might not have had otherwise.
It can improve employee retention and company sustainability.
Passion projects are often about giving people the time, permission, and resources to do something a little different.
These opportunities can be significant, say a sabbatical after several years of hard work. Or they can be smaller, more frequent breaks for people to pursue their interests.
Allowing employees to invest just 5% of their time at work into related projects can lead to major growth and new discoveries. In fact, it can help attract the younger generation of workers since 78% of Millennials believe being involved in side projectsis beneficial to their careers.
And outside projects give employees some leeway to work outside the strict confines of their normal day-to-day workload.
That outlet can be key to retaining employees for the long run. High turnover rates are costly, not just financially, but in terms of the human capital you lose and the negative impact it can have on morale.
Giving your team an outlet — even one that’s tangentially related to the work they’re doing — is a good way to foster individual growth and keep people from burning out.
Ideas will compound into something bigger and better for your team.
Many people are actually more productive when they have a lot going on.
When they know they need to get several things done in a day, they work harder to meet those deadlines.
I started my first company while I was still getting my Masters. Looking back, it’s hard to believe I was doing all that at once. But that’s how I’ve always been. Even in college I gravitated toward interdisciplinary studies — combining what I learned in my logic or astronomy classes with what I was writing about in my English or anthropology classes.
I never felt like my company and my schoolwork were at odds. I never felt like any one of my classes pulled my attention away from the others.
Side projects at a company don’t have to compete with the main goals. Ideally, team members will apply what they learn from those projects to their work — leading to new ideas, new opportunities, and a more flexible and innovative company
Image credit: Mila Supinskaya Glashchenko/Shutterstock
Determining whether your invention will be successful or not is an integral part of being an entrepreneur. Here are three reasons inventors are outsourcing the review process to increase efficiency.
When entrepreneurs and companies invent new products or technologies, they are understandably reticent to share their ideas with outsiders. After all, the business landscape is cut throat. They do not want to risk giving away their competitive edge. Still, most entrepreneurs are aware they need some feedback to ensure that their ideas are viable. They may form an internal review team to analyze their prototypes and conduct a market analysis.
While this choice may seem logical, internal invention reviews can be a waste of time and money. External reviews are a smarter choice. For instance, consider independent taste testers, who food companies outsource sensory testing of their products to in order to capture a broad and objective range of preferences. Beware of in-house reviewers, who are often incapable of delivering the objective analysis and insights you need to make sure your product does not fail.
Internal vs. external reviews
We will come back to the point about internal reviews inherently being nonobjective. There are additional reasons to outsource the invention review process. For starters, internal reviews can require significant time and money. Since the team members tasked with the review are employees, they may have to balance this assignment with their other responsibilities.
Generally speaking, internal reviews can take up to 30 hours at minimum, although they can take up to 30 days at larger companies. If you are paying employees over $75,000 per year (and, in the case of an attorney, far more) and you assign several people to the task, you are looking at thousands of hours and potentially hundreds of thousands of dollars to conduct your internal reviews, when they could be working on developing the top ideas and technologies instead. Be aware of where you’re spening money, as very little of your review expenses should be on the front end.
In addition, internal reviewers are not necessarily trained to conduct these types of analyses. A quality product study includes thorough research into your market, competitors and patent prospects. Someone who is not trained to vet ideas for commercial potential will not be able to generate the level of insights and recommendations you need to screen a technology. By comparison, external teams specialize in product analyses.
Privacy can be a concern when inviting outsiders to review your ideas. However, a non-disclosure agreement or confidentiality clause can prohibit external reviewers from revealing any sensitive and proprietary information. There are both legal and business incentives to adhere to these guidelines as the reviewers want to build a reputable business and are not in the business of stealing ideas for themselves. If the right safeguards are in place, you can trust that the review process will not expose your business’s important competitive information.
Here are three ways in which an outside review is more advantageous than an internal report.
Unlike your team members, review agencies focus solely on compiling invention reports. They can turn around an analysis much faster than your internal staff, and it will include a SWOT analysis, competitive research and intellectual property (IP) research – all the information you need to decide whether to move forward.
While some consultants charge high rates, many third-party vendors offer fast and affordable services. Instead of paying salaried employees to produce a lackluster review, you can secure a top-quality analysis at a fraction of the cost, freeing up your employees to concentrate on the development of your best ideas and IP assets.
I promised we would come back to this and saved it for last because I cannot stress it enough. When it comes to evaluating your commercial prospects, objectivity is everything. You need input from professionals who have no stake in the product’s performance. A third-party team is solely concerned with getting you informed answers and giving them to you with no pretense. Their jobs and egos do not depend on your product’s success. Those are the people you want reviewing your invention because then you will have solid feedback and perhaps fresh insight into whether your idea can be successful.
The worst thing you can do for your company is go to market blindly or with misinformation. Sourcing high-quality evaluations from professional invention reviewers will provide you with the necessary knowledge to help your company succeed. Whatever the reports contain, it will give you the knowledge to make informed decisions and develop ideas the world really needs and wants.