Today, regardless of the size or growth stage of your business, odds are you’ll want to outsource some functions. Outsourcing is often a critical part of scaling and growing a new business or product, but it’s an area where many people fall down. Like all aspects of business, there’s a learning curve.
How can you avoid some of the common pitfalls in outsourcing?
Take a disciplined approach.
Too many entrepreneurs abandon everything they’ve learned about hiring or dealing with consultants. It doesn’t matter if you use an overseas developer or someone right across the street. Perhaps because the outsiders won’t be full-time employees, or because they’ll be on a shorter-term contract, entrepreneurs are less careful about whom they hire. Or maybe they do a poor job of communicating what’s really needed, resulting in a big disconnect between what’s expected and what’s delivered. There can also be language and/or culture barriers that need to be addressed.
In addition, since the outsourced employees aren’t at a nearby desk or workstation, many entrepreneurs don’t bother to check on how things are going. This is a big mistake—you must monitor essential steps throughout the process. This way, if your consultant gets off track or you need to make adjustments to the original project, you can minimize your losses and get the project back on the rails before it’s completed.
Don’t take anyone’s word about the quality of outsourced work. Operate with the same diligence you’d use when making full-time hires. Check references to get a better picture of past performance. Agree on a very clear job description and, if possible, run a test by executing a small project together before handing over too much money or control. If you’re not getting the results you want, don’t waste time; cut your losses and move on. Even if people are referred by valued friends, be careful. I’ve found that most people aren’t very careful when referring consultants, who may be between gigs, out of work, or juggling lots of projects. Some are friends of the people making the referral, and the favor being done is for them, not you. Or the referrer knows them socially rather than through a business relationship.
Be absolutely clear.
If you paint an incomplete picture of your intended outcome, you’ll get something that only vaguely resembles what you had in mind. Many entrepreneurs have a vision but no concrete idea of how they plan to execute, so they hand the job over to someone else, expecting them to fill in the blanks. With a full-time employee, that can work. Your staff person can fill in the details of your broader vision; that’s what you hired them to do, and since you’re there, you can still exercise some direct control. They have the benefit of being in the office and getting feedback every day. They’re also using your materials and tools, and know how your company operates. Most contractors, however, only do what they’re told. That’s usually a good thing, because if they start filling in the blanks, they could take things in an unintended direction.
This also means you need to have a comprehensive understanding of your desired outcome. Write down the details as you think through each step in the process. Pass on your descriptions and expectations.
Make it a dialogue.
Continue the conversation throughout the process. Describe the specific look and feel you’re going for. Try to point out comparisons, since examples of like products can be used as models to provide a clearer picture. Think of this as similar to the process of building a home; you find houses you like and, ideally, walk your architect through one that’s close to what you desire.
If you’re developing an ecommerce site, for example, what’s the specific user experience you want? What are the steps in the buying process? Can you picture them in your mind? The clearer you can be, the more likely you are to get the result you want. Point them to two or three comparable websites you like that they can use as guides when building your site.
Manage against clear deliverables.
It’s important to specify key milestones and delivery dates. That keeps both sides honest and up-to-date and helps ensure the contractor is making progress (you can’t manage what you don’t measure). Assign strong managers to oversee contractors.
Sometimes the supplier will want everything upfront, a retainer/kickoff fee, or payment at regular intervals. Many entrepreneurs I work with attempt to pay solely based on performance. But there are risks with this model. If people don’t get paid, they fail to pay attention. As a result, the work doesn’t get completed, takes longer than expected, or is poor quality. Keep in mind, you don’t always have to pay in cash. Trading services may have the same value as cash to your vendor. But unless there’s an equal exchange in value, a project usually fails.
If your first reaction on seeing your product is, Hey, this isn’t what I intended, it’s not the end of the world. That’s just another reason we only build one thing at a time. Don’t take your disappointment out on your contractor: How much of the fault was yours for not being clear or checking in? You may decide after seeing a prototype that you want something altogether different. Instead of losing your temper, outline what you like and what you would like to improve. Communicate this feedback in a constructive way to your contractor.