10 Step Outsourcing Guide for Startups & Entrepreneurs

Here in early 2018 the evolving challenges of online BPO, or Business Process Outsourcing, for new bootstrapping startups can be exceedingly brutal.

Or, pretty darn easy.

That’s the point, in many ways we’re still in the Wild West of the digital workforce. And, that being said, this quick & dirty guide should prove helpful. I’m not going to fill every crack in the wall of your understanding, but there’s definitely a few gems.

We’ll start at the bottom…

What is BPO, or Outsourcing Today?

Business Process Outsourcing is currently a mixture of the the old and the new; when someone or a business heads out into the world to hire an individual contractor, agency, or a group to take over business processes. An easy example is the digital entrepreneur establishing an online brand via ecommerce, hiring specialists digitally or remotely alongside local brick & mortar brands and Fortune 500 corporations.

If you wanted to hire someone locally, or regionally, or even on the other side of the planet, how would you use the internet to find them? Where would you look and how would you go about it? There are so many wildly different approaches, another indication we’re still in a Wild West scenario.

Let’s take a look at a handful of commonly outsourced processes today.

5 Commonly Outsourced Processes

  • Finance & Legal Stuff: From looking over initial incorporation documents to keeping the books clean, serious official paperwork is often outsourced. This can include healthcare, insurance, investments, etc.
  • Outbound Sales: Includes just about anything involved in going out, or sending out your team to get leads. Because of the net this can be done in a large variety of ways – requiring an assortment of skills as foreign to most founders as accounting or legal docs.
  • Content Marketing: Again, another complex web of evolving activities and skills that most founders aren’t able to tackle whole or in part – web & graphic design, copywriting, software tools, blogging, social media and so on.
  • One-Off Projects: One of the core benefits of modern BPO – being able to hire someone for a project, rather than as a full or part-time employee.
  • Overflow: The most common collection of business processes I’m used to outsourcing, overflow, or anything that clients ask of us that we don’t typically do.

3 Signs It’s Time to Outsource

As there’s so many different processes that can be outsourced, from marketing and fulfillment, to lead-gen and web design, we’ll keep this more generalized.

#1: Need, But No Expert

Whatever it is, your business NEEDS it, but no one currently on the payroll is an expert who knows how to get it done well. Or, like we here at Virtus Ventures often experience, it’s a client’s need outside our specialties. Pretty cut and dry.

#2: The Dream’s Become a Time-Sink

What began as a wondrous leap of entrepreneurial ambition and innovation, has suddenly turned into a 50, 60, 70+ hour a week job. Yet, how many of the processes and activities gobbling up precious time could be outsourced or automated? By the numbers, a good percentage!

#3: Loss of Control – Falling Behind

Most great ideas start simple and pretty well-contained. Founders can easily wrap their heads around what’s happening and where the brand’s going. Then, without really seeing the landscape transform, they fall behind the complexities – social media, juggling partnerships, a huge increase in administrative tasks, digital components like SEO, expanding technology, and on and on.

Alright, so we’ve covered the basics and can move forward to lightening your load and increasing efficiency!

The following steps were my best attempt to streamline the process and provide valuable insight to those who haven’t tackled this necessary part of 21st century business yet.

We begin with a core question to begin asking…

Step #1: Consider the Value of Quality vs Cheap Work

Everyone gets it. Our instinct is to try and claw through the virtual jungle to discover the Unicorn contractor asking for a fraction of what they’re worth, right?

If you don’t want to learn the hard way(s), settle for nothing less than the most qualified contractor you can afford! Better to pay a talented and available individual for, say, 60 hours of pristine elbow grease than 3-5+ inexperienced contractors for 200 hours of low quality headache.

Once you get past the difficulties of locating them, getting in touch with them, engaging them, onboarding them, and hiring them…those 60 hours will be an incredible investment!

Just the thought excites my bank account.

Myself, and plenty of people I’ve worked with over the last decade have seen the fallout of poor online hiring methods and listened to countless horror stories. We’ve also seen and experienced the glory.

Unless the work or process you need to outsource is super-simple, or appropriate for entry-level, don’t throw money at cheap contractors hoping for superior results.

Talented freelance professionals with vision know how to maximize 10-60 hours of their time and focus. They do. The vast majority of their income typically derives from shorter contracts until they finally get nabbed up by a bigger fish and are no longer as available.

The big lesson here is…

Low Quality Work Is OFTEN Expensive!

Consider product development. In his Inc.com article, 8 Disastrous Outsourcing Mistakes You Need to Avoid, A.J. Agrawal, the CEO of Alumnify points out,

Many small businesses that lack sufficient funding or profits will be quick to look overseas when finding a development team. Unfortunately for these companies, in the long run in can do more harm than good. While it’s true that a merit of outsourcing is that it should help you save money in comparison with employing a full-time employee, this doesn’t mean you should be cheap. The lowest rates often come with a high cost–poor quality ratio.

In a general sense, consider thinking less globally for anything that requires clear consistent communication unless there are systems in place to overcome these challenges.

Of course there are exceptions. I’ve worked with very talented and available contractors in the Philippines for example, and China, and many more countries outside western Europe and the U.S..

Interns? Sure, no one’s saying you can’t find talented people for less, just don’t cut corners. The goal’s to get the best workmanship you can afford and achieve results with.

Speaking of which…

Step 2: Come to Terms with Budgeting

How much are you going to invest in hiring quality talent to help build your vision – annually and on a monthly basis? Your outsourcing budget is foundational and cannot be taken too seriously.

In fact, this budget should be intimately connected to your overall growth – content, audience, marketing assets, offerings, sales funnels, strategic partnerships and leads, and so forth.

Keep in mind these days established freelancing-style platforms can be easily connected to bank accounts and debit cards. This means you can create a separate outsourcing account and feed it into your accounting software or whatever it takes to add real structure.

  • Create a hierarchy of needs outside your expertise-pool to be outsourced.
  • Break down the total outsourcing budget into weekly, monthly, and annual segments.
  • Apportion appropriately, and stick to it!

Don’t neglect to include recruitment.

Unless you’re going to take care of steps #5-7, then someone’s going to be getting paid and this is an incredibly serious position that should be towards the top of your hierarchy of needs until you have a system in place.

Step 3: Address Team Management First

From popular solutions like Slack and Trello, to internal team-building functions within major online freelancing platforms, there’s a variety of ways to manage a virtual team these days.

Get a system in place ASAP! It won’t be perfect, and it should have margin to evolve naturally as you and your tribe begin making the magic happen.

How will these four components work together?

  • Team Communication & Collaboration
  • General Project Management
  • Marketing & Advertising
  • Recruitment & Onboarding/Replacement

I like how Forbes contributing writer Martin Zwilling put it in his article, 10 Key Outsourcing Mistakes Made by Entrepreneurs, where he states,

Entrepreneurs need to know every component of their business at a management level, or have a cofounder who does. Relying totally on a virtual team implies they are managing your company, not you. If you don’t know where you are going, you probably won’t get there.

What a challenge! Often, if the founder in question isn’t a tech-savvy individual, the cofounder or partner managing the online presence must be someone they trust or they become another modern BPO horror story – easily getting taken for rides.

A Note on Leadership

Where do we draw the line between management and leadership?

Even if your digital team is communicating like a well-oiled orchestra, and management is doing their job with flying colors, there must be leadership. Founders HAVE to get involved somehow, rather than being these shadowy outsiders who rarely make appearances in any way.

Cofounders, project managers, and the like shouldn’t be the only face of your brand to the specialists you hire, especially if you plan to hire them on multiple occasions.

Running a company these days means making time for your virtual team, even if these are folks living in other parts of the world. Leadership can shine through the digital veil as easily as it can through a brick & mortar corporation.

Step #4: Be Precise About Your Needs

Listen, if you don’t take this seriously you’ll dramatically lower your chances of being successful. Your current business model…will…fail. It’s near certain.

Let’s say you need to hire a web manager; someone to manage your company’s website and the many little levers it has going up and down daily.

  • What do YOU need them to do? Not an exhaustive or generalized list. Be specific.
  • What will you be spending on this management?
  • What do the poor, reasonable, good, and exceptional results look like?
  • What does their day-to-day for your brand entail?

Avoid hiring someone for a skill-set, or need, or specialty you don’t understand on at least a basic freshmen level. A big one is paid search engine advertising. How do you know if this ‘expert’ is taking you for a ride, if you have no clue what Google analytics and AdWords is?

No one’s saying you or your cofounders need to delve into paid advertising ecourses and ebooks for the next 6 months, but there must be a rudimentary understanding of your needs so you can have accountability in place.

Step #5: Choose Your Platform & Contractor Level

The number of freelancing web platforms continues to rise. If you’re unfamiliar, get your studies started through articles like, Top 25 Freelance Websites to Find Work in 2018.

Each is different, so it’s a good thing you’re being very precise about your needs!

Delve into the most relevant, or niche, and see what they have to offer and how their interface/website works:

  • How do you communicate with contractors?
  • How do you get a contract up and running as quickly as possible?
  • How active is their overall marketplace?
  • How is payment handled and what kind of contracts do they offer?
  • What level of contractors do they represent?

Currently, the title-holder for biggest and broadest is definitely UpWork. According to its Wikipedia page in mid Feb, 2018, the global freelancing platform boasts over 12 million registered freelancers and 5+ million clients, or agencies that do the hiring.

Sounds overwhelming, but it’s not that bad. They’ve made billions so the platform gets more intuitive and easier to use on a monthly basis. You’ve identified your needs, so using their internal search engine to begin researching contractors/agencies shouldn’t be difficult to get off the ground.

Step #6: Do Your Homework – The List

This is the meat and bones of your recruitment efforts. Whoever does this part and is responsible for compiling a running list of roughly 10 to 20 high-potential candidates per position (within reason)…is holding your future in their hands.

Three huge points:

  1. DO NOT approach talented, accomplished people with scripted anything. Approach them personally, with respect. They’re likely sent scripted proposals on close to a daily basis.
  2. Check portfolio’s beyond glancing around a few seconds. Don’t be dazzled by imagery. LOOK , READ and CLICK links to see what’s really there. Also, do this before pestering these busy people to supply you (an ask) with all kinds of examples of their work.
  3. DO NOT submit general proposals in the open marketplace. It’s ineffective. Instead, research contractors and send them personalized individual proposals. They can be 80% scripted of course, but with the intro 20% personalized to them.

If they’ve already made good money on the platform, or completed hundreds of verified projects, or logged thousands of work hours, are you really sure you need to ask them for example work?

It’s more about how well they can fit into the mechanisms of your business.

UpWork has an assortment of filters that makes it easy to break results down so you don’t have to swim through hundreds of pages. Make a list of contractors who aren’t only up to par, but available!

Look to see how many live or open contracts they’re sitting on. What level of commitment and loyalty are you looking for in a team member, or contractor? There’s far more to contractor profiles on UpWork than what you see at first glance, or in initial search results. Take your time. Be prudent.

Step #7: Engage & Evaluate Communication

When you get right down to the most important component of outsourcing and successfully building a team or system, it’s communication. No matter how talented a designer, writer, developer or project manager may be, if they’re impossible to get hold of, or are too busy, it’s a no-go unless there are remedies.

Sometimes, even though they’re available and you’re ready to fill the role, your communication styles, schedules, or whatever simply don’t mesh. It’s okay, but best to find out VERY early on in a working relationship.

First on your checklist while engaging with these promising contractors (who respond to your proposals) should be communication.

  • How quickly do they respond?
  • How polished are their messages?
  • What kind of feeling or vibe do you get from their writing?
  • How experienced do they feel?
  • How desperate for work?

In the beginning it’ll be messages or emails, but get them on the phone, or Skype or into a verbal conversation as the next step.

Now, either you’re good at reading people or you’re not. When you get to talking…ask questions!

Questions about who they are, what they’re into, how they got into their line of work, and how they tend to approach projects like the one you’re offering. Don’t just listen. Jump in. Interrupt them. Test their ability to communicate!

How well can they communicate what it is they’re a specialist at?

Step #8: Send ‘Trial Period’ Proposal & Confirm

In most cases a trial period is expected. Talented artists, writers, programmers, etc., are VERY picky when it comes to who they devote their time to. They need a chance to try you out as well.

The #1 thing here is that you’re completely on the level, know what’s expected, have had a chance to chat, and payment arrangements or milestones are ironclad. Send the personalized proposal, they accept, and you’re off to the races!

  • Trial periods shouldn’t be a bombardment. Instead, present a clear challenge to ascertain true skill levels and performance. Just don’t ask rock stars to suddenly become one-man-bands.
  • It’s also ridiculous to ask an amateur guitarist to be a rockstar, you know? In most cases, people should be hired for one specific thing, with the ability to grow and expand within your organization at their own natural pace, or through solid leadership.
  • Set a reasonable deadline, but ideally they should perform faster than you expect. Those yearning to deliver more than they’re asked for are worth their weight in gold, especially if they believe in your vision.

Only you know the specifics here. The goal’s to see whether they’re right for your brand or not.

Step #9: Assess Trial Period Performance

Well, how’d it go? Hopefully their work speaks volumes and everything works well. If not, don’t be shy and feel bad for going with your gut! It’s the nature of the beast in online outsourcing.

Some benchmarks to look at would be,

  • How did communication go throughout the process?
  • How much were they able to handle on their own successfully?
  • How smooth was the experience?
  • How do you and other relevant stakeholders feel?

Let’s assume it all goes fantastically, be sure to set up a post-trial meeting of some kind where you can lavish them with the praise they deserve, provide positive constructive feedback on how they can improve moving forward, and then see how they feel about moving forward.

Step #10: Incentives That Lower Turnover

At the end of the day, if I had to summarize my opinion on why startups tend to have such high turnover, it’s because founding members and the original crew who bring it to life don’t have great people skills.

They’re far better-suited to tend to their skills and what they do best, not necessarily tending to the folks they hire, no matter how well their recruitment method.

On the flip-side you’ve got this sort of motivational arch, or Bell curve, where new recruits are super-jazzed and then lose their motivation over time. So what are some things you can embed in your new business to improve output while lowering turnover?

Competence & Growth

It’s a delicate balance. In the most ideal of circumstances, your new hires will be amazing at what they do but feel challenged and enjoy doing it for your company. If what they’re doing is highly-repetitive and provides no room for growth – they learn nothing new, no progression – they’ll eventually leave if/when opportunities arise.

Plan ahead and prepare to provide a path onward and upward for those you want to keep aboard a while. For more project-based contracts, don’t make them so dry that talented people squirm at the thought.

Cultural Fits

I mean this in a triad of ways:

  • Cultural as in national origin. For example, oftentimes tossing a wildly talented American free spirit into a room of eastern engineers might not go so well. Or, maybe it does for a little while, then drastically cools off.
  • Startup culture.
  • Personalities.

Either someone fits, or they don’t. When they fit, being aligned in the ways above really helps solidify their position. Of course there’s many merits to being inclusive, and melding cultures, and experiment but humans are still humans, whether they’re working together online or in person.

Big Picture Impact – Experience

With so many options, a good portion of freelance professionals out there are choosing to get involved with startups that perform some sort of social or environmental service, or good. The big picture you provide is their cosmology – the big picture as it relates to what you and your company are doing.

If you’re Tesla Motors, or SpaceX, or Whole Foods, this isn’t so challenging. But not everyone is involved in such fantastic stuff. What if you sell a really boring, but useful piece of software?

Then you create an exciting brand story. And listen, there’s no shortage of ways to help make the world a better place. Get your company in the game and this will likely reduce turnover by a substantial degree.

Acknowledgement!

Every human being I’ve ever met, including myself, craves acknowledgement. Not necessarily in a direct or cheesy way, but just in a genuine way. There are endless ways to show people you see what they’re doing and appreciate it, right? Without acknowledgement, naturally one will sour to a position and seek elsewhere.

Wrapping Up

Let’s take a gander at all 10 steps so they’re nice and tidy:

  • #1: Consider the Value of Quality vs Cheap Work
  • #2: Come to Terms with Budgeting
  • #3: Address Team Management First
  • #4: Be Precise About Your Needs
  • #5: Choose Your Platform & Contractor Level
  • #6: Do Your Homework – The List
  • #7: Engage & Evaluate Communication
  • #8: Send ‘Trial Period’ Proposal & Confirm
  • #9: Assess Trial Period Performance
  • #10: Incentives That Lower Turnover

Looks pretty good, given the goal’s to keep this guide light and easy. For entrepreneurs that want to do it themselves, modern outsourcing is a journey, a skill set you’ll optimize over time and exposure. Same goes for startups until you get the hang of things and carve out a quasi-system.

Hopefully this has helped in some small way. If you would like to weigh in, please feel free to do so in the comments sections (do people comment on blogs anymore outside social media channels?).

 

Happy Trails!

Matt

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