When founders first create a business, it’s common for them to have to be the epitome of the Jack of all trades, chipping in on every bit of the business, even if they fundamentally lack skills in that domain. Research from the University of Texas at Austin highlights how valuable it can be to bring in specialist expertise at the earliest opportunity, and that doing so is usually better than trying to improve one’s own skills.
The researchers tested the effectiveness of four distinct interventions: training the owner, insourcing a worker, outsourcing an expert, and consulting, in a bid to overcome what is referred to as the “boundary of the entrepreneur”.
Beyond the boundary
“All of these interventions work in different ways, but the insourcing and outsourcing interventions tend to provide the biggest bang for the buck,” the researchers explain. “They also lead to good sales, profit and performance gains down the road. Hiring a marketing specialist proved especially critical.”
It’s vital to understand one’s own constraints and to try and plug those gaps. It’s impossible to try and do everything and still achieve growth, and neither should entrepreneurs try. Often, founders try to overcome this challenge by trying to develop skills themselves, but the researchers argue that bringing in external help is usually the better option.
A number of Nigerian entrepreneurs were placed into one of either a control group or one of the four intervention conditions. They were given subsidies to hire specialists, with help offered to screen service providers for quality.
Financial success
The researchers then tracked the financial performance and business practices of each startup for two years to see whether any particular approach appeared to deliver more success. The results show that among those in the insourcing or outsourcing groups, 80% decided to hire specialists in sales and marketing.
“If you don’t have money coming in, then you don’t have a business,” the researchers explain. “So, intuitively, it makes sense, and these entrepreneurs maybe thought the same way.”
By bringing in this kind of expertise, the startups were able to innovate more successfully and generally expand their footprint on things like social media. This helped to ensure that they had greater sales, and subsequently higher profits.
The researchers believe that in addition to helping drive strategy among entrepreneurs, their results can also help to inform governments and other entrepreneurial support organizations on the best way to help entrepreneurs, especially in developing countries.
“We now know that facilitating access to skilled specialists helps owners move beyond the entrepreneurial boundary and grow their businesses,” the authors conclude.
