Outsourcing can be a key strategy when bootstrapping a business.

In an article in The Tennessean and then again on his "The Entrepreneurial Mind" blog Jeff Cornwall, director of the Belmont University Center for Entrepreneurship explains:

Bootstrapping operating costs through outsourcing can help owners get to break-even sooner and improve profit margins as the business grows.

Outsourcing is a strategy that can work very well for a start-up and very small businesses. Rather than bear the cost of renting space and hiring a staff, these businesses utilize the excess capacity of someone else's business to make their product.

But outsourcing can sometimes also mean "offshoring", sending at least some of your company's functions or processes to foreign countries like India and China.

Whether you plan to send part of your business functions be it call center services or software design to Shanghai or Peoria, Atlanta-based entrepreneur Scott Burkett suggests a few things to keep in mind:

1. Don't outsource work that needs to be directly supervised. Whether outsourcing to China or to some guy in Jersey, outsourcing is not for the control freaks among us and it probably shouldn't be done for parts of your business that are your specialty. (More on this later).

2. Don't outsource stuff key to your product or service. If you're a software designer you probably shouldn't get someone else to design your software but having a call center answer phones for you so you don't have to hire a receptionist may work just fine.

3. Limit the risk. Designing an entire business around an outsourced service may be a problem, but this depends. Drop shippers, for example, build their entire business around products in someone else's inventory. Then again their key function is selling not providing inventory, right?

4. Outsource services easily duplicated elsewhere. Virtual assistant and virtual office services are good examples of this. Get on line and you can find tons of vendors to choose from and if one doesn't work out you can just pick another one.

5. Don't outsource core competencies. Recently I launched an Internet community that will focus on creating and managing a diverse variety of content. Because our core competency is content not programming we're purchasing the platform from someone else and can just relocate if it becomes necessary.

6. Don't outsource sensitive tasks/information. This could be anything from a revolutionary software program to a secret cookie recipe. Again you kind of should be personally handling key aspects of your business like this stuff anyway.

7. Keep the outsourced tasks simple. Along with #1, if you get somebody to create, say, the cover design for your independent record label's first release (this has actually happened to me) there's a limit to the complexity of design they're probably going to do or be able to do. Keep it simple and it won't get screwed up. If you have something you want specially done, do it yourself if you have the ability or figure out how to partner with an incredible artist or designer whose work you admire in the record label example and get them to do it.

8. Don't focus only on savings. If something gets messed up you'll have to pay to fix it and that may end up costing as much as if you had spent more money in the first place.

9. Get references before you use an outsource service when possible. Often they should be able to provide some past clients you can contact.

10. Remember a guy making below U.S. minimum wage in a distant country may be doing your project. Or some computer geek doing this in his spare time after long hours at his day gig. It may be a good image to keep in your mind when deciding which tasks you plan to outsource.

11. How much will supervision cost? Some outsourcing services make this easy and keep you constantly in the loop. I've had this experience with service intensive companies like music duplicators and I'm sure there are analogies in other industries. But if you send your software job to India and then have to get on a boat to monitor the progress take another look at the costs and consider other options.