SmallBizResource Blog -- Business Know-How

18 Tips For Small Businesses That Outsource

Posted by Janet Attard, Courtesy of Business Know-How Thursday, Mar 19, 2009, 09:35 AM ET

Outsourcing has received a bad rap in some circles because of its association with job losses that occur when corporations "export" jobs to countries with much lower labor costs than the U.S.

But those of us who run small and home businesses have a different perspective on outsourcing.

For us, outsourcing is the "secret sauce" that lets us pull together the resources to handle temporary work overloads, reduce fixed costs, speed products to market, simplify distribution, provide more or better service to our customers, and compete with our deeper-pocketed competitors.

Much of the business that small businesses outsource goes to other small and home businesses within our own country. Often those freelancers or subcontractors are business owners we've met at local business meetings or events. Sometimes they're people we've "met" by participating in a mailing list or forum, or via specific Web sites, like Elance.

But the key to successful outsourcing has little to do with where you meet the subcontractors and freelancers you work with. Like anything else, it takes planning. Here are 18 ways to get the best results when you outsource work:

1. Think through the scope of the project.

2. Identify the skills and resources you'll need to outsource to complete the project.

3. Know the results you want to achieve.

4. Use a formal statement of work for big projects you plan to subcontract. For smaller tasks, clearly outline what is expected of each contractor.

5. Rely on contracts, not memory, to be sure work is done as you expected.

6. Understand how long it should take to complete the work. (Ask others in your industry if you're not sure.)

7. Set a realistic time table for achieving results.

8. Monitor performance and time, but don't micromanage. Contractors don't like micromanagement any more than employees do.

9. Be open to suggestions from freelancers or independent contractors about better ways to get work done. They may see pitfalls or time-savers you don't because they've done similar work for other customers in the past.

10. Communicate frequently and politely with your contractors and service providers.

11. Never "point fingers" or let anyone on your team do so either. If your Website is running slowly, your Web programmer is blaming the data center, and the data center people think it's the Web programmer, then you're the one who's going to suffer unless they can communicate politely with each other to find the underlying problem.

12. Insist on all service providers and vendors document their work. It's your business. You've got to be able to run it whether any one contractor is involved or not.

13. If you're having original work created for you (writing, computer code, etc.), be sure your contract gives you all copyrights in the work. You need unrestricted license to use and modify work done for you regardless of whether you continue to use the vendor.

14. If you're licensing a product or service from a third party (instead of having someone create it for you from scratch), be sure you understand all the terms of the license.

15. Have your lawyer insert appropriate clauses in your contracts to protect you from any wrongdoing on the part of contractors you hire.

16. Find multiple vendors or contractors for work you need done. You need to know your business can continue even if something happens to a service provider.

17. Give vendors or contractors you've never worked with before small projects to start. Increase the difficulty and scope as you see they can handle the work to your satisfaction.

18. Offer feedback and praise. Employees aren't the only people who like to hear that you appreciate their efforts. Your contractors appreciate that kind of feedback, too. (If you need to share some criticism, here are eight tips to make that conversation as comfortable as possible.)

Business Know-How

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