Make or Buy Strategy - Swedish Ventures

A “Strategy About What to Do Yourself or What to Buy” for a startup refers to a structured decision-making process regarding which functions or resources should be built in-house versus outsourced or purchased. This strategy helps optimize efficiency, reduce costs, and focus on core competencies while leveraging external expertise when necessary.

Key Considerations in the Strategy:

Core Competencies vs. Non-Core Activities
o Focus on in-house development for aspects critical to the startup’s unique value (e.g., proprietary software, specialized services).
o Outsource tasks that are support functions, such as bookkeeping, legal compliance, or cloud hosting.
Cost Analysis & Financial Impact
o Compare the cost of building internally (hiring staff, infrastructure) vs. buying externally (vendors, SaaS subscriptions).
o Example: Developing an app internally may cost more upfront but save money long-term, while licensing third-party software offers quick deployment but ongoing expenses.
Time & Speed to Market
o If speed is crucial, buying an existing solution can accelerate development.
o If customization is needed, building in-house may provide more flexibility.
Expertise & Skill Availability
o If the startup lacks technical expertise, outsourcing specialized tasks (e.g., AI development, legal services) might be more efficient.
o If expertise is available internally, focusing on proprietary development can strengthen the company’s competitive edge.
Scalability & Future Growth
o Consider whether the business needs long-term ownership of technology or processes (favoring in-house development).
o For flexibility, external providers may offer adaptable solutions with evolving features.
Risk Management
o In-house development ensures greater control over security and intellectual property.
o Buying or outsourcing may reduce upfront risk but create dependency on external providers.

Common Areas Where Startups Decide Between DIY vs. Buying:
Function Do Yourself (In-House) Buy / Outsource
Software Development Proprietary tech, core product SaaS platforms, third-party APIs
Marketing & Branding Strategy, content creation Ad campaign management, PR firms
Finance & Accounting Basic bookkeeping Tax filing, financial auditing
Legal & Compliance Internal policy creation External legal advisors
Customer Support Direct engagement Third-party support services
Manufacturing & Logistics If highly specialized Supply chain outsourcing

Why This Strategy Matters for Startups

Reduces costs by making informed decisions about internal vs. external resources.
Boosts efficiency by focusing on strengths while leveraging third-party expertise.
Enhances scalability by structuring investments wisely between self-built and outsourced services.

Written by Swedish Ventures, Rolf Olsson. Remarks to this article could be sent to glossary@swedishventures.se.

ASO: DD-04-09