Entrepreneurial skills – outsourcing and sharing economy

“It always seems impossible until it’s done”. – Nelson Mandela

There was a time in business when you needed to have all the knowledge. Carpenters had to build the whole house – from flooring, cabinetry to door installation. Now, markets have changed. Opportunities, due to the vast communication network, are now extensive. Some services, like coaching, once too expensive for the young entrepreneur, are now easily accessible

This can also change your business. If you have a tattoo shop, you need to consider how your client will reach you. What if you find out that there is no smartphone application showing tattoo shop owners with their final arts near you? You can buy professional app development for less than 500 Eur. Or, just hire an expert to prepare the tattoo shop marketing and advertising plan for you. You can get it for 100 Eur. This is a fraction of the cost that a big Marketing Agency, would charge you. Or if you just need a professional looking, mobile-friendly website with free hosting for the first year – you can get it even for 120 Eur.

This model is called outsourcing – to assign something that needs to be developed or a job that needs to be done, to an external company or a person outside of your company. You can find many websites which connect clients (you) with freelancers (somebody who is in general self-employed and has the knowledge you need). Examples of such websites are www.freelancer.com and www.PeoplePerHour.com. These platforms allow millions of companies and individuals to connect and share assets with minimal expense, sometimes even for free. 

When you start to think about outsourcing, your role becomes more managerial than a productive/technical one. Define the product, select your developers, test the product and then use it. Your role is to split the whole development into little tasks and outsource it. After the development check it and then put it into the production. You’re the boss – don’t forget this.

One of the biggest failings in outsourcing is insufficient innovation. Freelancers will develop what you need with as little time invested as possible – and they will not innovate the product. This needs to stay with you, so don’t forget to get any documentation necessary for development for your archive. You need to maintain your knowledge assets and, probably, some other freelancer will build upon existing product – he will need documentation to start.

Yet, there is another business model called “sharing economy”. In this business model, assets or services are shared between private individuals, either free of charge or for a fee, usually via the Internet. It is also known as collaborative consumption, collaborative economy or peer economy. You can share your office, your bike or car or even your internet connection. And it is a growing business – just think about Airbnb!

So, you don’t need to do everything by yourself, and you can share what you possess for the time you do not need it. This will help you make progress much faster and cheaper. Even though you may be the only one employed in your company, you can still behave like a real boss and use freelancers to do the tasks that your employees would typically do.

Supporting evidence and practices

According to the Statista, a US based statistics company, the worldwide revenues of the outsourcing industry from 2010 to 2017  are from 80 – 100 billion US dollars per year. At least 25% of this comes from various online services. This means the outsourcing is not something new – and it is proved to be successful business practices (https://www.statista.com/statistics/189800/global-outsourcing-industry-revenue-by-service-type/).

The business case for outsourcing varies by situation, but the benefits of outsourcing often include one or more of the following: (based on www.cio.com article on outsourcing)

• lower costs (due to economies of scale, lower labour rates, not having enough specific knowledge)
• access to skills or resources that your company does not have
• greater flexibility to deal with changing business and commercial conditions
• accelerated time to market
• lower ongoing investment in internal infrastructure
• more time for focusing on other topics

All these benefits are important for startups and companies at the beginning of their life – insufficient time, money for professionals working in the company, without knowing the full market or having lack of experience in this specific industry or in general. It is an opportunity to jumpstart your activities.

Additional resources and links

• https://djangostars.com/blog/outsourcing-risks-and-ways-to-mitigate-them/ 
• https://docs.google.com/document/d/1LMt-NIEiuwwvCxzpUj3KZar7PzEdVa9YptalBaP3rCQ/edit#