Property powerhouse Ryan Windsor steps back into the ring for a substantial chat with Nate Chai. In the interview we discuss; what leveraging is, how you can effectively use it, and when it’s the right time to outsource.
FF: Great to have you back Ryan! One of the concepts that we in the property investment and entrepreneur spheres hear about all the time is outsourcing and “leveraging” could you explain what each of those terms mean?
RW: Hi Nate, thanks for having me back on! That is a great question and one I hear a lot when I mentor entrepreneurs and start-ups at Cambridge Universities Judge Business School. To me outsourcing and leveraging are the foundation of being an entrepreneur and are the two skills you need to develop to become successful.
Getting good at outsourcing and leveraging all comes down to knowing one’s self. You need to recognise what you are good at, what you enjoy, but also what you would rather not do. Once you understand yourself, it allows you to concentrate on your strongest skills and leave the tasks you’re weaker at to others. This is the key to outsourcing.
A person with “leverage” is someone who has superior; knowledge, experience, networks and partners. Therefore, they can use their advantages to create more opportunities for you and themselves.
Leveraging a relationship works better when you have a strong relationship with the person in question. A key point to remember is that leveraging should provide value for both parties. You can use leveraging in a variety of situations. For example, if you need to extend your payments, need an introduction to a particular person, or if you want to use a personal achievement to help with branding and PR.
There is a famous quote that points out how knowing the right people is as important or even more important than “knowing” itself, and that is certainly relevant for entrepreneurs:
“Educated people are not those who know everything, but rather those who know where to find, at a moment’s notice, the information they desire.” – Albert Einstein
So, outsourcing is basically hiring someone else to do a task we do not have time for or are not skilled at. When would you suggest someone takes the plunge and hires someone to work within the company rather than outsourcing part of their business to an independent contractor?
It is not trivial to give a “one size fits all” answer here. It depends on a lot of factors. Factors like the business model, financial capital, profit margin, growth rate, burn rate and so on. Also, one should take into account the risk profile of the individual and their ambitions.
While some people are happy with a smaller business that is low risk and low growth (like a lifestyle business), others want a super-massive beast of a business employing hundreds of people and trading internationally. Of course, these goals will require different approaches.
If we were looking at a typical growth business, I would suggest outsourcing to begin with before hiring staff. Once I find a sustainable, repeatable business model, I outsource low-level tasks one by one so that I eventually am working on the business and not in it.
I would not outsource before the business model has been proven with an MVP (minimum viable product) and demand is sustainable.
I now outsource for 90 per cent of my business ventures. I have partnerships with various entrepreneurs, professionals, and companies. We work together and utilise each other’s network, employees, and skills to provide services to our clients. This is very low risk and results in the opportunity to test and pivot my business model very quickly.
When looking to make your first hire I would consider your cash flow position and ask yourself the question; “Is this position key to becoming sustainable and growing my businesses?” If the answer is “yes”, you better hire, if not, you can re-evaluate this later.
One of the key things I have learnt about hiring is that you want to spend time on getting the right people into the company. The people that share your vision, are enthusiastic, have the skills, and fit into your company culture.
Many new business owners try and hire junior employees thinking that they are saving money and can train them up. In reality, this often backfires and the owner spends the majority of the time answering questions, correcting, or even repeating their work.
Jim Collins, author of Good to Great, states that: “Leaders of great companies ask: First Who, Then What?”.
This excerpt from the book highlights the importance of this point:
“You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you. Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they’re going—by setting a new direction or by articulating a fresh corporate vision. In fact, leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And they stick with that discipline—first the people, then the direction—no matter how dire the circumstances.”
It’s all well and good waxing lyrical about the importance of a team and outsourcing menial tasks. However, the majority of entrepreneurs I speak to say “We get it! But how can we afford to pay for outsourcing when our margins are so low?” What advice do you have for those guys?
I say “why do you have to pay!?” Partner with others so they take on the parts of the job or business that you do not like, or cannot do.
For example, one of my recent business ventures was in software development. I studied this when I was 18 and did pretty well but I quickly lost interest in the actual coding. However, I now have the ability to communicate with both programmers and business people. So, recently, I partnered with a software developer to build a business. I would concentrate on sales, consulting and account management and he would code. No risk, pure organic growth and a safe way to test if there is a market and if we could scale.
Another more recent example comes from my property business (Windsor Properties). I was getting asked by landlords to manage their properties in the Suffolk/Norfolk area based on my experience, reputation with tenants, and connection with the local council. I took on a few properties but realised that a partnership with one of the top independent lettings agents would increase my margins as my overheads would be lower. I would also be able to focus on the landlords’ businesses helping them expand their portfolio.
That’s a fascinating approach, leveraging your own skills in exchange for another’s leverage! How can our readers start looking into ways of leveraging their network?
This comes down to knowing one’s own personal strengths and weaknesses. In addition, it is important to learn to recognise opportunities but also to assess them carefully, without rushing into things.
It is all about becoming a good matchmaker. You need to look out for people in your network who have complementary skills, but also who would be willing to work on a project with you.
Both skills and motivation play essential roles in any collaboration of this kind. Once there is a match, it is important to decide which responsibilities to keep and which can better be delegated. This balance, I would say, is essential for a successful and continued partnership.
I guess that’s why so many enterprising gurus claim “your network is your net worth”, what kinds of questions should we be asking people at networking events to see if they would be great people to “leverage” with?
I would definitely agree with that statement. There could be a lot of value in your current network that is untapped. It comes down to cultivating that entrepreneurial flair for spotting opportunities and bringing people together to unleash that potential.
I recently learned of a great digital marketer who was unsatisfied with his 9 to 5 job, and I also knew of a lot of people who would benefit from his services. So, I leveraged my network and set up Windsor Media Group, partnering with this marketer who happened to be in my network already. We now provide quality solutions to people with digital marketing requirements.
Leveraging, at the end of the day, is about creating value for everyone who is involved. The question you need to ask any potential partner is whether the value of an initiative increases in the case where you join forces.
For top questions at networking events, I would keep the following in mind, and start from there:
- Values: Do you share the same values, if not, will this create any conflict? Can you see a clear path?
- Goals / Vision: Do your goals match? Think about both personal and professional. If these align it will make the relationship much more effective
- Commitment: How much time do you expect you and your potential partner to put into this new project and are you both happy?
- Integrity: Possibly one of the most important issues, does your new partner have high integrity, openness, and transparency? If not, walk away.
- Skills and experience: Fundamentally you need to know if this person can do what you need them to. Do they have the skills and experience and are they willing to share?
Remember a long-term business partnership is like a marriage, you want to ease your way into it, make sure it is what you both want, and when it feels right you will know.
Finally, what are Ryan Windsor’s top three pieces of advice when it comes to outsourcing and leveraging?
- Know yourself: Knowing your strengths and weaknesses will enable you to think about who can fill those gaps and keep you progressing.
- Know your network: This is really important. Not everyone will want to create that extra income or side hustle, so knowing your network is key to presenting the right opportunities to the right people.
- Create value: You need to create value for all partners involved, quality really is key.