Sometimes you just can’t do it all. Sometimes you don’t want to do it all. That’s the challenge for small businesses with limited resources. One way to respond is to outsource. Keep what you do well or what’s critical and hand off other tasks to people who are experts at it. While outsourcing can help extend your capacity, it’s not without risk. Learn how to manage outsourcing by starting with these five tips.
1. Know the pros and cons.
Outsourcing frees you to focus on what you do best. Imagine being able to spend more time on activities that will grow your business. Others can handle duties outside your core, often more efficiently and with greater expertise. That saves you the cost of hiring someone on your payroll. But you also risk a lack of focus on you and your customer, especially if your outsourcing partner works with several companies. That can result in costly delays and poor quality. You may also open yourself up to greater liability for misdeeds of your partner, like leaking confidential information. Talk about these concerns up front while vetting vendors and have a solid contract in place that looks out for your interests.
2. Define your needs up front.
Before you search for an outsourcing partner, decide what you’re looking for. That means clearly identifying your must-haves, what level of service you expect, and your budget. It will help you better articulate your needs to potential partners. The more information you can provide, the better able they are to size up the opportunity and respond. It’s also something you can use to assess whether you’re getting what you need after the service is delivered.
3. Hire like it was your employee.
Just because an outsourced partner isn’t on your payroll doesn’t mean you can skimp on selection. Consider taking the same steps you do with your own employees. It can vary based on the function you are outsourcing but you might include: recruiting based on referrals, requesting work samples, interviews, references, and background checks.
4. Establish milestones, rewards, and consequences.
Before starting, establish key milestones in the project and what will be delivered at each point. Then tie your payment to those milestones. Some businesses pay a small sum up front, then a gradual percentage at each milestone along the way. The remaining balance is due at the end of the project. If milestones are not met, it’s also important to identify the consequence. That might be a withhold of payment until services are complete or a penalty.
5. Document your understanding.
Get your agreement in writing. It should include details like the scope of the project, deliverables, due dates, and the agreed upon price. It is a good idea to have your legal advisor review it. If you make changes, like a new due date or requirement, be sure to document any modifications. That includes keeping any correspondence discussing these changes. Documentation can help you clear up any confusion if a disagreement occurs.
Outsourcing can help you do more of the right things by focusing your resources on what you do best. Improve your chances for success by considering these tips before you start.