Sunday, April 10, 2011

Why Outsourcing Works for Small Businesses

Outsourcing is becoming more popular, every day. Many types of businesses are utilizing this practice with great success. Not only does it save them time and give them more control of many aspects of their business, it also saves them a great deal of money. Outsourcing is simply hiring freelancers, or a company, to complete work on a project basis rather than hiring employees. The project is paid for either on an agreed to price or by the hour.

Businesses who are considering outsourcing a portion of their workload should consider the following tips, in order to achieve the greatest level of success.

First and foremost, a third-party vendor should never be chosen based on cost alone. Choosing the lowest-priced vendor may seem like the best alternative, but many times it is not. Be careful about comparing hourly rates. A lower hourly rate may just mean that the vendor will take longer to complete the project.

Many individuals have reported that disregarding the highest and lowest priced vendor and going with one somewhere in between, yielded the best results. The motto "You Get What You Pay For," holds true. On the other hand don't pay for expertise you don't need.
Evaluate each prospective vendor as you would a full-time employee. It is wise to check references and ask several questions in regard to work experience and areas of expertise. Saving money on services rendered won't make up for shoddy work.

Clearly state the project requirements. As obvious as this may sound, it is very important to be upfront in regard to the expectations of the outsourced project. This will save time and frustration for both parties involved. Provide an outline of the project to each vendor and ask them to bid on the project. Include target dates for completion for each segment of the project. Paying for the project in increments is wise as well.

Start small and work up to a larger workload. When outsourcing a project for the first time, use the vendor on a trial basis. Awarding a small project will give you the opportunity to approve quality of work, etc.

Once you are satisfied with vendor performance, you will feel much more comfortable handing over the entire project. Since the vendor will now understand exactly what is required, he will be more comfortable, as well.

Last but not least, always 'get it in writing'. It is unwise to do business without a contract, in any setting no matter how confident you are with your choice of outsource providers. Include the scope of the project, target due dates and payment.

Article Source:
Find Small Business Financing Resources. Dee Power is the author of several nonfiction books including "Attracting Capital from Angels," "Inside Secrets to Venture Capital" and the novel "Over Time" about Green Bay Football.

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