Outsource with ease in small business
Outsourcing to contractors for small businesses can be a double edge sword.
If done right, it can be a real game-changer. The ability for small businesses to bring in the right skills and expertise, on a project-based, or as-needed basis, can help businesses thrive and grow.
On the other hand, if it’s not done well it can leave business owners in a world of pain with sub-standard outputs; unhappy clients, and invoices to pay with nothing to show for it. I have seen small business owners end up worse off for outsourcing because it was done poorly, which costs the bottom line a whole lot more than it ever should have.
So what is ‘right’ when it comes to outsourcing, and how can small businesses do it with ease?
1.Have a written agreement in place. Always. Without out fail. Every, Single, Time.
This can be a service agreement that the contractor issues to you, or you can develop your own independent contractor agreement that you issue to the contractors you work with. It doesn’t matter who issues the document, provided there is one! And take care to ensure that whatever agreement you use, includes:
Crystal clear expectations of both parties – what services will the contractor provide to you, and what information or details do you need to issue to the contractor so they can do their thing?
Time-lines. Who is doing what, and when?
What happens if there is a delay? Despite best-laid plans, we all know that sometimes things happen, and time-lines are delayed. What is to happen if this arises?
Fees. Exactly how much are you paying, when are you paying it, and how are you paying it?
Termination. If either of you wishes to terminate because it’s just not working (and hey, it happens!), what sort of notice is required and how do you deal with the outstanding work, and what payment sums need to be paid at this point.
2. Have regular touch points.
Check-in with the contractor to see how things are progressing. Are they on track to meet the timelines agreed? Often a scheduling a couple of quick calls can save a lot of paid and headaches later because touch points can help keep projects on track.
3. Make sure the contractor is genuinely a contractor.
There is a lot of law around what constitutes a genuine contractor, versus an employee. There are real consequences if you get this wrong (and this includes a claim from a contractor for a heap of unpaid entitlements) - trust me, this is not a place you want to end up – so be sure you don’t!
Amongst other things, a genuine contractor needs to be free to work for other businesses; provide their own ABN, and be responsible for their tax, superannuation, and insurances; be free to carry out the work at times that suit them; provide their own equipment to enable them to do the work, and be free to do the work without your direct supervision.
In short, I think outsourcing for small businesses can be brilliant. But like all things in business, it needs to be done properly to avoid the headaches and pitfalls that can come if it’s not. This is another illustration of prevention being better than cure in business.
The importance of proper legal documents when outsourcing has been discussed by the High Court, and you can read more about that in our blog Engaging an Independent Contractor | What the High Court has to say.
You might like to read more of our tips in our Building Your Small Business | The Beginners Handbook here.
If you outsource in your business, or if you are thinking about it, feel free to book in for a free 20-minute chat. Let’s check that you have all your ducks in a row and if we can help, we would love to!