Outsourcing for Great Profits

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I’ve mentioned outsourcing many times throughout the kit, and it can be such an enormously powerful way to grow your business that I felt it deserved a chapter all to itself. After all, the power of leveraging is used extensively in many industries, and its successful implementation in your web business can multiply your efforts with ease.

Find the right people, set up the right system, and away you go. It sounds simple, but the reality can be quite different. I’ve outsourced for years and had some fantastic experiences and some truly awful ones.

In this chapter, we’ll define outsourcing. We’ll consider its advantages and disadvantages. We’ll look at where you can find contractors to help your business. I’ll offer some tips on how to assess their suitability, and then talk about the best sort of brief you need to give them. I’ll teach you how to avoid the mistakes I’ve made. Then we move on to start the process of working together. As you might know or imagine, sometimes things just don’t work out in life, and you will not be able to move forward with a particular contractor. I’ll provide you with the must-do protective step to avoid the fallout from a failed working relationship.

We’ll then see how to manage projects once you’ve developed relationships with a number of contractors. My biggest piece of advice here is to select one of the project management software solutions I recommend and start using that. Your project management life is a lot easier with the right tools, and you’ll find it an extremely effective means of ensuring the very best in terms of collaborative communication and work.

Then we finish off with some strategies and pricing strategies to make sure you stay well in the black with scope for strong growth. Download this chapter now, so you’ll have it handy to guide you as you embark upon your journey through the big, wide world of outsourcing.

Outsourcing isn’t for Everybody
I’ll start off this new chapter by stating the obvious: outsourcing isn’t for everybody. Some people just don’t like outsourcing, for a variety of reasons; they like to do the work themselves, find the management of contract staff too difficult, or have been put off by one or two bad experiences.

Then there are others who swear by outsourcing and view it as the path to significant profit and growth. I’m one of those guys, but there are a few hurdles to overcome on the road to success.

No one makes a fortune working for themselves — it’s always about leveraging what you have or what you offer in the most effective way.

Defining Outsourcing

So let’s take a look at outsourcing by first defining what we mean when we use the term. By outsourcing, I mean paying someone else from outside of your business to complete a task or project. It is usually done to:

  • access skills and services not available internally
  • increase the amount of work completed by your business, which translates to more income
  • cut costs — think of Indian call centers, utilized by all sorts of large companies, as the classic example of cutting costs via outsourcing

The person or firm you outsource to can be a friend who does the work, or someone you find through a contract service in your town, or someone further afield that you find after posting your project on one of the many sites (such as Elance, SitePoint, and Scriptlance) that cater for just what we’re talking about here.

Counting the Advantages of Outsourcing

The way to outsource for big profits is by leveraging.

That is, instead of you slaving away and completing one site for $5,000 and making $2,000 profit per week, you can complete three $5,000 sites and make $6,000 profit per week. Then, with your new systems in place, you generate more and more business — happy clients help you along by referring more prospects to you. Now imagine completing five sites per week: all of a sudden you’ve soared from $2,000 to $10,000 per week in profit. The secret to this — the secret to outsourcing for big profits — is leverage.

Leveraging is what makes millionaires. You know the impact of effective systems on increasing the effectiveness of your business. Systems that enable you to contact 100 prospects a week instead of ten. Systems that enable you to meet 20 prospects instead of five. Systems that enable you to complete 10 projects per week instead of one.

By way of example, let’s say you charge your firm’s time out at $100 per hour. It’s only you in the business and you work eight hours a day, five days a week. That’s $4,000 per week. But if you contract another person and charge them out at $100 per week and only pay them $50, then you have $8,000 per week coming in and $2,000 going out: you’ve just increased your income to $6,000. Then you gain a few more contractors at $50 per hour: now you have four people at $50 per hour being charged out at $100 per hour.

That’s four contractors at $100 x 8 hours x 5 days = $16,000 in. Your pay to them is $8,000 per week. Now you’re up to $8,000 profit per week; add to that your $4,000, and you have $12,000 per week.

Now this is basic stuff, but it’s the key to big profits. With ten quality contractors, you can get ten times the work done of one. With your minimizing the risk through good management, you reap the profits of ten jobs being completed. In theory, you’ll make ten times as much! So let’s take a more in-depth look at the advantages of outsourcing:

Access wider skills and services.
The ability to access skills and services not available internally is a huge advantage. A simple enough example is that, whether you’re a designer or programmer or usability expert or search engine optimizer, you simply can’t possess and offer every single skill your client needs.

Let’s say you’re a web designer. You make great-looking web sites that your clients love. You’re also aware that the copy on the web page is very important and can increase sales of the site’s product very substantially. Your happy client asks you what they should do about getting effective copy on the web site to help increase the conversion rate. You’re faced with the following options:

  • doing it yourself
  • employing a copywriter
  • referring the client to someone else
  • outsourcing the project

You know you’re not such a great writer, and you don’t want to provide a poor-quality job for your client. It’s only a one-off copywriting job, so the demand isn’t there for you to employ a full-time copywriter. You don’t know anyone to refer the client to, and you don’t want to lose control of the client.

So that leaves you with the outsourcing option. By using the resources I’ll mention shortly, within a few short hours you’ll have a range of quality copywriters either pitching for the writing job, or you’ll have your brief meeting with a couple of experienced copywriters you’ve used previously. The next day, you’ll have some solid quotes from quality writers and will be able to quote your client for copywriting services. The client is thrilled.

Not only do you make more money from the healthy management margin you added, but you also:

  • build the relationship with the client by meeting their needs
  • develop the relationship with the copywriter — next time you need a writer, they’ll be there
  • keep control of the client
  • expand the service offerings of your business for the future

Improve the quality of what your business provides.
As a web developer, you need to be trying to provide the absolute best solution for your client. Let’s say you have developed a great site for your client: it looks great, loads quickly, has great copy that converts, and generally works well. Problem is, the site only gets ten visitors a day. Those ten visitors per day all love the site, and 30% buy the product.

Some visitors find the site through the search engine strategies you have implemented, but you’re just learning and you know the quality of what you’re providing your client could really benefit from a search engine optimization expert. So you find a search engine expert, let them loose on the site and within a few short months you’re well ranked for your major keyword term and instead of attracting ten visitors a day, the site receives 500 visitors a day. Your conversion rate holds at 30%, the site now makes 150 sales per day, is a huge success, and you’re now well recognized as the person who provides a top-quality site.

Increase the amount of work completed by your business.
Increasing the amount of work your business can take on means more money coming in. In a nutshell, this is the main benefit of outsourcing.

Many hands make light work — and many hands also means more work can be done. With increased hours of work or projects being performed, obviously your income will grow. Instead of you slaving away to complete one site a week for $5,000 and making $2,000 profit per week, you can complete three $5,000 sites and make $6,000 profit per week.

Cut costs dramatically, allowing greater profit.
Let’s say you employ a web designer at a salary of $50,000 per year. There are the associated costs on top of that $50,000 — health, insurance, holidays, sick pay, and all the rest. Then they need a computer, and software, and an ergonomic chair, and a staff room with a coffee machine in it. You get the picture — the costs go on and on, long after you pay their salary. Employing a full-time worker is expensive.

However, if you only draw upon those skills at the time you need them, you can cut your costs. The competition amongst web designers for contract work means you can cut those costs sometimes by a very, very significant margin.

Counting the Disadvantages of Outsourcing

Of course, as great as the benefits of outsourcing are, there are some disadvantages — otherwise everybody would be doing it.

Here are the major disadvantages I’ve found over the years:

legal issues
You’ll often incur legal fees in drawing up a contract; also, it’s extremely difficult to get legal satisfaction should your contractor be in another country. Laws differ from country to country (and state to state), so you need to make yourself aware of the relevant laws in the area in which you are operating in addition to the laws that affect the contractor you are engaging. Be aware of the difficulties involved in commencing legal action against another person or company in a foreign country.

Another constant legal concern we battle against with our web designs is copyright infringement. We occasionally use web design contest sites (like SitePoint’s Contests) and have had issues where the designer has assured us the graphics used in a design were free of any copyright restrictions. It is very difficult in many instances to verify copyright ownership, and we rely to a large degree on the honesty of the designer. On more than one occasion we’ve discovered that an image has been used without the permission of the copyright owner and we’ve been liable for additional costs. With the benefit of this expensive experience, we now insist that the designer undertake to guarantee that images used are copyright free, and to be liable for payment of any images found to be otherwise now or in the future.

confidentiality and trust issues
It is often necessary for contractors to be provided with a whole range of confidential information regarding the client and the client’s business. The question is: can you trust them with that information? Sure, you’ll protect yourself legally as best you can, but sometimes you simply can’t cover all the bases of a sneaky and dishonest contractor.

Is the contractor trustworthy? I’ve had my own contractors go to my own clients behind my back and attempt to undercut my project quotes, as we saw in the case of Jacqui in Chapter 4, Taking the Plunge. Conversely, I’ve had contractors deal with large-scale ecommerce sites with no problem at all.

Along with whatever legal protection you can implement via confidentiality agreements and the like, it’s critical to undertake a comprehensive risk analysis of each person whose services you will engage. As the web developer engaged to provide the service to your client, you are responsible for all aspects, and that includes the actions of any contractors you engage.

A contractor isn’t always the right person for the job.

control and quality assurance issues
With international time zones, other work the contractor might have on, and language issues, you always lose a little control with contractors. You can lessen this with the right management, but it’s not the same as having a paid employee sitting at the desk beside you.

After all, you don’t have the same level of relationship with a contractor as you do with your own staff. Their goals and your goals will be different — and because of that you lose a fair bit of control over quality and project completion time frames.

Some Case Studies

So far we’ve covered what outsourcing is, and taken a look at the advantages and disadvantages. Let’s take a look at a couple of personal experiences I’ve had over the years:

Example 18.1. Too Busy for New Clients

A client came to my business for a new web site. It was a busy time of year, and we were flat to the boards just keeping up with demand. We provided a quote, entered a design contest brief on a SitePoint contest (where designers quickly design web sites in an effort to win the competition you have set up), and within days we had four great designs for the client to review.

We paid the contest winner for the design and then did our backend coding.

  • The client was happy as he got a nice design.
  • The SitePoint entrant was happy as he made some dollars.
  • I was happy because I’d just bought myself an extra week or two of time and I’d made a chunk of profit on the design.

Also, very importantly, we gained a new designer whom we could trust and use on subsequent projects.

Example 18.2. Losing Control
A client approached us needing a project completed quickly. I contacted a contractor I’ve used previously and of whom I’d formed the impression of being very reliable. We fully briefed our contractor; he accepted the job knowing the urgency, and agreed to the time frames. We assured our client the job would be done. Now, take your pick from this list of excuses:

  • Internet connection was down
  • email wasn’t working
  • had to reformat hard drive
  • had to drive a sick relative 200 miles to hospital
  • became ill and was bedridden for one week

No matter which one you picked, you’d be correct. This contractor used every single one of those excuses to explain why we didn’t hear back from him, despite repeated emails, phone calls, and instant messages. Our client was disappointed and angry, we were disappointed and angry, and our contractor couldn’t have cared less.

But like I said earlier, the right sort of management can help you to avoid those problems, and provide you with an alternative way to generate greater income than what you could do alone.

Charging Plenty

Now, here’s my other secret for making big profits with outsourcing: charge a lot. I know it sounds a bit obvious, but get your head around charging a lot more than your contractors charge to do the actual work. By a lot more, I mean five to seven times more, sometimes even more than that.

I’ve come across many people in my travels that have difficulty understanding the commercial nature of business. These people equate higher prices with ethically wrong practices.

  • They see getting the client as the easy bit and don’t attach any value to it.
  • They see managing the client as simple and therefore not worth charging for.
  • They see making a healthy profit as somehow exploiting the client and damaging the web development industry.

I’ve often quoted clients over $5,000 for a web site development, and used a Monster Template as the basis for our design. We’ll select three or four templates, edit them, and then show the client. Then we’ll buy the template that the client likes, customize as required, and we’re done. So we’ve paid $60 for a template, spent three hours customizing the design, written and inserted the content, and charged $5,000.

Like I always say, it’s not about the costs — it’s always about the value. Our expertise ensures the client gains an excellent solution to their problem. That is, we ensure a design that is well suited to their market, we write content that converts the visitors to customers, and the content is optimized for search engines, which means more visitors. That’s why value is a far better thing to charge for, rather than the actual time taken to complete the project. If a contractor charges me $1,000 to complete a job, I need to factor in:

  • general business overheads
  • attracting the job
  • managing the client
  • managing the contractor
  • ensuring the job is completed appropriately

I’m also bearing all of the risk associated with providing the service or project to the client. This includes aspects such as legal liability should anything go wrong, damage to my reputation if anything does go wrong, not getting paid, and much more. Plus, of course, we need to make a decent profit: a profit that allows us to grow; a profit that allows us to invest in the latest technology; a profit that enables us to keep on learning so that we can provide the client with great value on an ongoing basis.

We spend a lot of time attracting the clients we want, and then ensuring they are delivered fantastic solutions that work with a minimal of fuss. Therefore, when a contractor quotes us $1,000 to complete a project, it’s not unreasonable to then on-quote it for at least $5,000.

Finding the Best Contractor for You

Now you’ve seen the good, the bad, and the ugly, let’s take a look at how to find the best way to outsource for you. There are all sorts of options with finding candidates to consider. You’ll need to understand your needs exactly in order to find the contractor who can meet them all. This step will then enable you to set out your requirements in a project brief. When selecting your contractor, there are many factors to take into account, as we’ll see.

Locating Candidates

These are the options where people usually look for contractors when they decide to outsource work:

friends
This one can be tricky. There’s an old saying: "If you want to lose a friend, start working with them."

That’s often all too true, but on the other hand, friends often provide fast and easy solutions with minimal hassle. You’ll need to take this one on a case-by-case basis, relying upon your knowledge of that friend.

networking
Through attending various functions and forums, I’ve gathered quite a sizable network of suppliers who can assist us in developing quality solutions for our clients. So go along to industry functions, participate in that forum, and spend some time meeting people who do the same sort of work you do — they can be a terrific source of help when you need it.

advertising
Advertise where the people who have the skills you require might be looking. This can range from newspaper advertisements to online job search sites. There’s an extensive range of online resources:

You’ll find immediate access to a range of services and skills at sites such as these — usually at a huge discount on your doing it yourself.

There are numerous ways to find contractors — some ways are better than others. Even though these methods are different, the aspect that always remains a constant is that you, as the project manager, need to understand the requirements you’re looking for.

Remember, it’s not all about the person being good at what you need them to be good at. Sure, that’s part of it, but there are other aspects that are equally important.

Analyzing your Outsourcing Needs

Now that you know where to look, the next step is to document exactly what you are looking for.

This step doesn’t include just what the technical specifications are for the project at hand. After all, a brilliant programmer who can’t meet deadlines isn’t going to help your business. Very importantly, you need the following sort of information about the contractor to enable you to make the right decision:

This list includes:

  • Can the contractor do what you require?
  • Do they complete projects in a timely matter?
  • Do they meet goals?
  • Do they communicate often and effectively?
  • Are they responsive to feedback?
  • What’s their record like? Ask for references and example of previous work.
  • What are the payment options?

Depending on where you search for your contractor, you’ll find a few or all of the above criteria addressed. For example, using Elance enables you to see the feedback on each person bidding to complete your work. You can see information related to their communication, their responsiveness, and much more. Obviously, this step is a little more difficult if you use newspaper advertising and the applicant supplies a list of references of previous clients — and you can bet the applicant won’t supply references from unhappy previous clients!

The research we’ve done on why people choose particular contractors has shown that the decision-making influences are much the same as those that people use to select any type of supplier. The major issues, ranked in order of importance, are:

  • quality
  • experience
  • reputation
  • price

Other aspects impact on the assessment, but the above are the main ones. After all, it’s how our clients judge us, and it’s how we judge contractors.

Now that you have a good idea of the personal and management skills of the contractor that you require, it comes down to you providing a detailed description of the project to be completed.

Writing the Project Brief

Developing the brief is not a simple task. As I’ve mentioned, my company outsources almost every service we provide for web site design and development projects. From that experience, I have learned this absolute truth for managing contractors successfully: communication is key to the successful management of contractors.

Communicate the exact brief. Communicate the exact time frame. Communicate the exact payment terms. With a well-documented brief, you can maintain the quality over the work being completed. Spend a day or more developing a perfect brief for potential contractors; get the brief right, and you’ll save yourself headache after headache.

If you haven’t written a project brief before, here’s the best bit of advice I can give you: cheat. That way you’ll avoid the costly and time-consuming trial-and-error project brief development that many people go through. It is critical that you provide potential contractors with a detailed and very specific project sheet so they know exactly what they need to bid on and the expectations associated with completing the project.

Take a look at the places where others typically search for contractors, and make a note of what they mention in the project descriptions. You’ll find the experienced ones provide highly detailed information related to the project and associated requirements (such as language required).

Here’s an overview of the format we use — it’s one that’s served us well over time.

Example 18.3. Sample Freelance Brief

the project
Here, you set out a full and detailed description of the project.

the brief
This important section explains the freelancer’s part in the project, providing details surrounding graphics, colors, documentation, and so on. Here are some of the points that might be addressed in a thorough brief:

  • overview
  • color scheme
  • navigation
  • style
  • limitations
  • desired file format
  • artwork provided
  • domain name
  • notes
  • sample work
  • references

background information
This section provides background information on the business for which the job will be completed.

constraints
Here, you provide important information about the constraints on the project: for example, no frames, load time less than nine seconds, and the like.

client adjustments
This section explains exactly what happens when and if changes are required to the work provided by the contractor.

delivery
This point explains how, when, and where the deliverables will be made.

payment terms
This section describes the exact terms of payment. As the contracting business, you must stick to them — to the letter!

deadline
This final section identifies the project deadlines. These need to be absolute: if the contractors are a day late, they’ll always be late. If people don’t deliver on time, don’t use them again.

There is also a template set out in the Generic Project Brief and the Project Brief for Contractors on the CD-ROM.

Assessing Potential Contractors

As I mentioned in Chapter 17, Expanding Staff and Office Space, the major issues when selecting a contractor are quality, experience, reputation, and price. Bearing those in mind, once a contractor makes contact with you in reply to your efforts, it is time to act. This is when you essentially lay the foundation for how the relationship will develop — you need to make it absolutely clear to the potential contractor what your expectations are, and you need to lead by example. Make sure your communication is timely, crystal clear, and relevant. Setting the stage in this way essentially tells the potential contractor, "Here’s how we act — we expect the same from you."

Okay, let’s assume you’ve had the first contact and are ready to begin your initial assessment of the potential contractor. The first thing we all do, whether we’re aware of it or not, is make an instant judgment of them based on what we’ve seen or heard so far.

An email will tell us a great deal about the person’s attention to detail and written communication skills. A telephone call will tell us a lot about their verbal communication skills, language issues, and more. I’d very strongly suggest you at least call the potential contractor prior to working with them. And, of course, a face-to-face meeting is a chance to gather even more information.

Aside from that first impression gained from the email, telephone call, or personal meeting, here are the aspects that you’ll assess:

examples of past work
As I’ve said previously, the best indicator of future performance is past performance. Ask for examples, but if you’re still not convinced for any reason, remember that the beauty of web work is that there’s always the potential to undertake a little digging in an effort to assess whether this person has the attributes you are looking for.

reference check
When you’re looking at hiring new contractors, it’s important to check their references closely, but not take references too seriously. After all, a potential contractor is not going to give you the contact details of angry previous clients!

Ring those references up, email them your questions, even write to them. Find out if your potential contractors are as good as they say they are. The questions to ask referees might include: "Do you know the person in a social capacity? Was the project a success? Were deadlines and goals met? Was communication clear? Is the project/web site still going?" After all, these people are going to be members of your team: you want the right people!

scope for future work
This is an aspect many people don’t think about. When we begin a relationship with a contractor, we want the relationship to build, develop, and lead to an ongoing and long-term mutually beneficial one.

To that end, we need to know whether the contractor feels the same way — or if they’re a 15-year-old high school student who just wants to do this project so they can have some holiday spending money.

price
Price is the interesting one. We’ve seen an enormous difference in the prices quoted to us for contractor work because of a few different reasons: the main reason being that the contractors don’t quote on what’s asked in the brief.

Assess the price with the thinking that you want this relationship to build into a long-term one. Be careful not to underpay your contractor by so much that they’re working for peanuts — that’s not good for building your business, because the contractor will become resentful at being paid too little and the quality of work will suffer, or the contractor will refuse to work with you again.

To build a thriving business you need a great team — you simply cannot do it all yourself. You need to attract and keep the best talent you can. That means paying a fair day’s pay for a fair day’s work.

While those points cover the major aspects of your initial assessment, you should also — where possible — research and analyze the company or individual you are dealing with in an effort to minimize any nasty surprises down the track. For instance, does the person have a criminal record? It wouldn’t be nice to find out that your contracted web programmer has a history of convictions for site hacking.

It’s been my experience that if there have been any problems at all with potential contractors, you shouldn’t employ them. You can’t afford anyone but the best. I used to think I could change the way a person worked to fit in with our standards, but I’ve found it almost impossible. Like I said earlier, the best indicator of future performance is past performance.

This is information you need to know: don’t be afraid to ask the potential contractor any questions you need to during your assessment.

In a similar vein, it’s important to set the standards of the working relationship as early as possible in the relationship. If you deal with the potential contractors in a highly professional manner from day one, then the standard is set, and this can have a very positive influence on the way your interaction develops. If the initial contacts you have with the contractors are sloppy, error-ridden, and too casual, then the standard of their work is likely to be a direct reflection of this. You’ll receive what is expected. So keep those expectations high!

Key Points

  • Document exactly what you require in a contractor, including non-technical aspects such as timeliness.
  • Write a clear project brief to ensure a successful outsourcing campaign.
  • Consider factors such as past work and references when selecting your contractor.
Working with your Chosen Contractor

Great! You’ve found a contractor and, after all your diligent research, feel confident in your decision to work with them. You’ve provided them with the full brief, and they know exactly what their role and responsibilities are. They’re also aware of the deliverables to be achieved. Let’s hope this is the start of a beautiful friendship!

Starting Small with a Contingency Plan

We hope, but we can’t be sure — we need to take matters slowly and test things out a little at a time. When working with a new contractor, always assign them a simple, small, non-critical project to start off with. Your agreement must include all the deliverables their end — what they have to do and by when — along with what you have to do: give them a decent brief and pay them on time. Remember, though, that if the contractor is in another state or country the cost of enforcing the contract or seeking legal redress for damages is likely to be prohibitively expensive. A contract really doesn’t do much; you rely upon goodwill. This is why your clear communication is so important.

With your detailed brief, the contractor should provide you with your completed project just the way you want it. Simple!

Not always. One thing I’ve learned over the years is to have a contingency plan in place in case deadlines are missed. That way your client won’t suffer and you’ll maintain your reputation for quality work completed on time. So start off the contractor with small projects and, assuming you work well together and they meet your various criteria, slowly increase the size of the projects they work on. That way you can try before you buy, in terms of a big commitment, and ensure you do the best for your business.

Be careful even with the trial jobs. These can really hurt you if you’re not careful. A few months back I had a contractor do a small job for one of our clients. We needed the contractor to visit the client and deal with her directly; in this case, the client knew I’d contracted out this task, which isn’t always the case. Sending a contractor into the client is unusual, but the client requested something we don’t specialize in, and we suggested using a trusted contractor and putting a management fee on top. The client was happy with that. The contractor saw the client and completed — very slowly — part of the project. The client required changes to the work, as was expected from the start. The problem was our contractor had lost interest and didn’t want to go back to complete the job.

This was a lose-lose-lose situation all round. The client was annoyed because the job wasn’t completed. I was annoyed because the job wasn’t completed and my reputation with our client was damaged. The contractor was annoyed because he’d done some work and I didn’t pay him for it.

I’m sure in a lot of cases this would spell the end of a relationship between a client and their web developer. However, we’d kept in constant contact with our client explaining what was going on, and because she was a long-term client, she accepted the problem and we moved on. But that’s a client who has been of terrific value to our business over a long period of time, who was planning a major upgrade of her web site in the coming months. That simple $500 job could have cost me in excess of $10,000, all because the contractor lost interest. I’ve had a couple of these nasty experiences — eventually I realized that I needed strategies to minimize the hurt!

Being Clear About Payment

Payment terms are another critical area; it has to be an integral part of your agreement. Nothing demotivates someone more than not being paid when they’re supposed to be paid.

There are obviously a million different ways you can pay your contractors, from a deposit and balance on completion, to progress payments, to full payment on completion. It doesn’t matter what the payment schedule is, though. What matters is that both parties agree on the payment schedule. It matters that you document the payment schedule. It also matters that you stick to the payment schedule to the letter.

Establishing the best payment schedule can prove difficult at first. We generally do whatever works best for the contractor. I must say I prefer paying 50% deposit with the balance payable on completion, but some contractors prefer a deposit and progress payments, and others even like us not paying them until what we owe reaches enough for them to buy a new car! Just make sure your payment agreement is absolutely clear, and stick to it.

You don’t want to overpay a contractor, but you don’t want to underpay, either. There is no greater disincentive than not receiving a fair day’s pay for a fair day’s work. If one of our regular contractors completes work for us and says, "Hey, Brendon, this job actually took me four hours to complete instead of two, due to this, this, and this," we’ll almost always pay the extra. Before you start thinking every contractor would try that trick with us, I’d like to make a few points.

  • We trust our regular contractors. They wouldn’t be regular contractors if we didn’t.
  • It’s a two-way street, and our contractors know this.

I once had our primary programmer misunderstand my brief entirely — she quoted on a massive job that we didn’t actually need done. We accepted the quote in good faith. As we started the job, it became apparent to the programmer that the quote we accepted was far in excess of what we needed. Our programmer didn’t hold us to the quote, but reduced it to an appropriate level. Simple.

We do assess the quotes, but more important to us are factors such as ease of working with the contractors, their ability to do the job, and the quality of their work.

It’s fair. Being fair sets the tone of the relationship.

It aids our reputation within the market. If we pay people extra based on the extra work they’ve done, then they’ll be very keen to receive one of our request-for-proposal emails. They know they’ll be treated well and fairly?and that can result in a lower price. Easy!

Key Points

  • Start as you intend to continue; set an example.
  • Trial your contractor first on a non-critical job.
  • Negotiate a payment method that works well for both parties.
Management Tips and Tricks

Okay, so now you have a pool of quality web workers you can call upon. You know them, you trust them, they perform quality work to deadlines. Excellent. Now let’s move onto the next part: management.

Managing one project is easy. Three projects are slightly harder. Five are harder still. Ten is harder than that. Managing multiple projects is a skill in itself; there are a ton of things to juggle, deadlines to meet, and clients to keep happy. We’ve looked at project management before, in the section called "Managing Multiple Projects", and this would be a good place to look for managing your outsourced projects. In addition, there are many excellent sources of information to help you overcome any outsourcing inexperience on your part, including SitePoint’s own Outsourcing Web Projects: 6 Steps to a Smarter Business.

Being Nice to Contractors — you Need Them

I did some marketing for a construction company a few years ago, and part of my work involved talking with the subcontractors that the construction firm used.

The stories I heard were appalling. The construction firm took months to pay overdue invoices, they very rarely communicated with the subcontractors, and they ignored any complaints. I relayed these findings to my construction firm client, expecting them to be devastated. Not really? — hey said something along the lines of, "Yeah, we know all that. We don’t pay them because we want to keep the cashflow for as long as possible."

That’s definitely not the way to build a great working relationship with suppliers! The way to treat your contractors is probably a method you first heard about in kindergarten, and it’s really very simple. Treat others as you yourself would like to be treated. Remember the points we delineated in Chapter 13, Delighting your Clients, and, essentially, throughout the kit?

  • We all love recognition.
  • We all appreciate positive feedback.
  • We all like it when others are nice to us.

It’s that old law of reciprocity. If you’re nice to me, I’m much more likely to be nice to you. Give some praise, send a thank-you card, maybe a Christmas gift. You know what to do?it’s the theme I’ve been hammering on about all through this kit.

Include your contractors as part of your team — if they’re in your local area, invite them to company celebrations. After all, they’re an important part of your team. Develop the relationship the way you want the relationship to go. Be nice; be friendly; think of your contractor. Treat them as you’d like to be treated. Keep in contact and provide positive feedback when you can. It all adds up to strengthening the bond and enabling you to get the most out of your contractor.

Don’t do what everybody else seems to do in this day and age. That is, don’t force your contractor down on price to the point where they’re hardly making any money. Don’t give them a quick brief and expect perfect work. You need to see the contractor for what they are — a potentially fantastic resource for helping you grow your business — so treat them like the important person they are. I’m not saying you should accept shoddy work, but when you find a great contractor, you need to build the relationship so you both benefit in the long term.

Try this experiment: next time you use a contractor, pay them what you owe, on time, and then send a gift along with a thank-you card as a surprise bonus (food hampers, gift cards, and book vouchers are always likely to be appreciated, and very easy to organize online). The contractor will be amazed and they’ll be very keen to work with you again. Remember, rewarded behavior gets repeated. So reward that behavior of quality work, if you’d like to see it repeated.

That’s the first rule of outsourcing for big bucks: put together a pool of talent that you can call upon to perform quality work in a timely manner. Build this group to be as large as you can, although, believe me, it will take time. My own experience tells me that about one in ten contractors will measure up to high standards. In speaking with other web developers, I’ve found that our experience is typical. Part of the reason for that, I think, is that quality web people are hard to find and the good ones are very quickly snapped up.
Having a Backup Plan

When the best-laid plans go wrong?as they sometimes will — have a backup plan. I’ve mentioned earlier where my business was let down at the last minute by a graphic artist; in that case, I had to pay a premium to another contractor to have the job hastily finished.

It served me right! The point here is this: never trust anyone. If you assume people won’t deliver, and assume it every single time, you are forced to get a system in place.

Our system to avoid problems is simple: we give ourselves lots of time. If a project is due for delivery to the client in 30 days, we’ll make the deliverable just 15 days from our contractor. We communicate frequently in the lead-up to that 15-day deadline. We’ll have another contractor ready to take over at any stage, should the first contractor not meet the deadlines.

Then if that contractor needs to take over, we’ll have another contractor ready if the second contractor falters — a situation that’s very rare, fortunately. That way, you’re very likely to have quality work completed to your deadline, if not a long time before the deadline is due, which the client always loves.

Summary

Outsourcing isn’t for everyone, but its advantage lies in the ability to enable you to leverage your business’s capabilities in terms of new skills, experience, and expertise, while at the same time reducing costs.

Finding the right people to outsource your work to is the most important aspects of the whole equation: with a hit-miss ratio of about one to ten, it takes a while to build a solid team you can depend on. But with planning and focus, before long you can have a team to rival your biggest competitors, at a fraction of the cost. Once you have the team, you have the leverage.

Managing projects effectively requires skills, knowledge, and understanding?and using collaborative project management software makes your task a whole lot easier. As with any business transaction, it’s important to cover all of your bases and have a fall-back position for when problems arise. It’s your responsibility as the project manager to minimize the problems and minimize the negative impact of the problems.

It won’t be long before a business currently completing one web site per week can easily churn out ten web sites per week!

Congratulations — you now have all the tools you’ll need to start, build, and expand your business that we explored in this section. But the fun doesn’t stop there! In the next chapter, I’ll present 100 tips to live by as you move along the path to developing your new business in the weeks, months, and years ahead. Check out the kit’s full table of contents to find out what else it’ll teach you, and don’t neglect to download this and three other chapters for your reference offline.

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