Outsourcing work should not be something you dread. The fact that you have a need to outsource work means you have been successful in your business. You can gain a lot of freedom in outsourcing work to others, as long as you follow sound guidelines. Otherwise, you could end up doing your small business more harm than good.
You don't want to outsource work too early in your business. If you don't have a firm handle on the direction of your business, or what makes it run well, you will confuse the independent contractors you work with. You will then waste money trying to figure out your business systems while training them. Some independent contractors will stop working with you out of frustration, and you will have to restart the process all over again.
Outsourcing work should only be an option when you know your business in and out. If you are at the point where if you had to, you could write a handbook on how your business operates, and the duties and responsibilities that you require of each independent contractor, then you are ready to outsource.
Unless you have substantial income each month to pay a salary to an employee, you're going to be outsourcing work to freelancers and contractors. Determine your overhead costs, and what percent of your income that represents. For example, if you're a virtual assistant, determine what percent of your monthly income pays for your business and marketing expenses, such as:
- Web hosting fees
- Internet access
- Long distance calls and calling cards
- Monthly subscription to online billing or client management software
A ball park if you're not sure is 15 to 20 percent. Figure out a dollar amount for how much time it takes you to review the work of another virtual assistant, and based on your hourly rate. Subtract your time to review the work and the percent for overhead costs from what you charge clients per hour, and you're left with what you can pay a subcontractor. If the pay is too low, then raise it to a fair price, and make adjustments in your overhead costs.
You can use that process for any service based business. For a products based business, you would pay a commission based on what's normal in your line of work.
Test Them First
It's frustrating when you think that a freelancer and contractor is going to be a perfect fit, but you soon find out that they are not anything close to what you were expecting. By then, you've laid out your entire vision for the business, shared your heart and given them too much information. Before you put your hopes into a virtual or non-virtual working relationship, test the person you're outsourcing work to. Give them only a few assignments to start with. Make sure you have the time to do the projects yourself in case things don't work out. Take note of how that person handles challenges and meets deadlines. You're testing their personality and temperament, as well as their abilities. If they don't communicate difficulties with you, or rise to the challenge, they won't be the right person for you in the long term.
Outsourcing work can be beneficial to your business, but you have to approach it wisely.