Entrepreneurs and small business owners are always looking for creative ways to accomplish more of their business goals for less money. One strategy that can help you save time, money and frustration as you start and build your business is to outsource as much work as possible to skilled, bust cost-effective, external service providers.
While doing this, there are some best practices to keep in mind, that would help you get the most out of your relationship with external vendors or contractors.
Here are a few of them:
1. Clearly define the scope and schedule for your project
This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverables you expect the vendor provide.
Give vendors as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements – project schedules can have a huge impact on project costs.
2. Look for specific experience fit
Ideally, the service provider you select will have specific experience with the type of project that you’re undertaking. This is especially crucial when outsourcing complex technical projects such as software development.
For example, if you’re looking for someone to develop an application, make sure they’ve actually completed such kind of projects for other satisfied customers. This advice holds true for other types of projects as well. If you need a business plan for opening a retail store, you’ll get best results if the consultant you hire has verifiable experience in the retail sector.
3. Don’t choose a vendor based solely on price
Though it might be tempting, never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid.
Buyers report that their most successful projects are the ones where they felt the vendor offered a balance of good value and quality results.
4. Review portfolios and samples
Examine the vendor’s previous work (their portfolio) and make sure that their previous work meets your expectations for quality and style. If you’ve evaluated a vendor’s portfolio, references, and previous experience and are still unsure of their capabilities, consider asking them to do a quick mock-up or provide a basic outline of a work plan.
A service provider who really wants to win your business might be able to give you a rough concept so you can better understand their approach to solving your problem.
5. Tie payment to clearly defined project milestones
Just as you should be clear about project scope, make sure that you define a work plan for your with clearly defined milestones. Having scheduled checkpoints where you review the status of the project as it works toward completion, is an easy way to ensure that you meet your final deadline and that the final product meets your standards. Tie the vendor’s payment to these milestones.
A good guideline for IT and software development projects is to pay no more than 20% to 30% of the total project price up front, with the rest of the payments awarded based on the completion of 3 or 4 milestones.
6. Get it in writing
During the course of a service engagement, the scope of the project, deliverables or even the agreed upon price may change.
Make sure that you clearly communicate any schedule, scope or payment changes to your service provider and get confirmation from them – in writing – that they understand and agree to the changes. Similarly, keep a record of any agreement changes requested by the service provider and whether you accept or reject those modifications. Save copies of any email exchanges that you have.
We bet you found these tips helpful. Share your thoughts in the comments section section below!