Seattle Small Business Blog

You’ve decided to jump in head first and hire a subcontractor. So, you ask a couple of colleagues for recommendations and they suggest Susie Sub. They say Susie is a hard worker and she’ll do a wonderful job for you. She’s very talented.

So you contact Susie Sub and agree upon a rate for your client’s project, sign a contract and you hand over the specifications, expecting Susie to have her work finished by the next week.

The next day, you email Susie for an update, thinking she might have some questions and knowing that you need to be a supportive project manager. By that night though, you have heard nothing back from Susie.

You figure she’s probably working so hard on your project, she’s forgotten all about email. She’ll answer your email the next morning.

Except that’s not what happens. Three days later, you’re frantically trying to contact Susie. You’ve called her, emailed her, done everything short of hop a plane and fly out to her house to make sure she hasn’t been kidnapped.

Another day passes and the client is asking questions, wanting to know how the project is going and asking for a few changes to the original project. You still can’t reach Susie, so you start working on the project yourself. If you work straight through the next day and night, you might be able to meet the deadline.

And then Susie emails. She’s been off at her sister’s house, which has no Internet. She did work on your project though and it’s all complete, right on time. You go through it, and the work is excellent. But you’re so worn out at this point, you almost don’t care.

The moral of this story:
Make sure you give your subcontractor a trial period before you give her any really important client work.

Had you put Susie through her paces first, you’d discovered that she has a habit of not communicating during a project, even though she does the work, does it well, and does it cheerfully.

This situation may or may not be a deal breaker for you – either you can handle Susie’s silence because of her excellent work, or you’re going to be so stressed out by the lack of communication during the project that you can’t possibly work with her.

A trial period can also bring out other issues:

1. Inability to do the requested work.
2. Busting deadlines.
3. Negative attitudes.

Some problems may not arise during the trial, but you can take quick action to address those that do, and possibly save yourself some headaches.

When you do run a trial period, make sure you are paying your subcontractor for her work. You may go ahead and sign a contract, including a provision for the trial period.

You’ll also want to be sure and give your subcontractor constructive feedback after the trial period is over. After all, Susie may have worked for your colleague for years, and the colleague never worries because Susie always comes through. If you ask Susie to be available for communication throughout the project, she may be more than happy to do so.

Hiring subcontractors adds a new dimension to your business. Not only are your clients paying you, but you’re paying your subcontractors. While this does create a bit more work for you – or your bookkeeper – the increase in your productivity will more than pay for the extra work.

In order to make your system to work though, there are a few things you need to keep in mind.

Pay Per Hour or Per Project

First, you need to determine how you’re going to charge for a project. Are you going to charge your client an hourly rate or a per-project rate? You’ll also need to find out if your subcontractor is going to charge you hourly or by the project.

Second, you’ll need to find out how much your subcontractors charge for the work you need them to do. Once you have this information in hand, you can determine how much you charge for the services you provide (project management, client communication, editing). Add these two numbers together, along with any other necessary fees, and you’ll have the amount you need to quote the client (although I recommend adding a small contingency fee as well).

In any case, it’s important that you make sure you charge enough to cover your subcontractor’s fees, the time you have invested in the project and any overhead that might be associated with the project. Once you have your numbers in place, you’ll also need to make sure you sign a contract with the client and with the subcontractor before anyone begins any work. Check with your lawyer to find out what needs to go in the contract.

Sending Payment

Once the project is completed, some subcontractors invoice immediately. Other subcontractors invoice monthly or even weekly. You’ll need to speak with your subcontractor to find out what his/her policies are.

Also, some subcontractors may sell you a set number of hours or tasks per month and you pay a set amount. They work until you have used up your hours. This is a good arrangement if your subcontractor is completing tasks that aren’t directly related to specific clients or projects.

Check with your subcontractor ahead of time about specific payment arrangements. Typically though, with online subcontractors, you’ll be able to pay via Paypal. In some cases, you may be able to pay via credit card, or the subcontractor may accept checks.

With a smaller subcontractor, you will most likely be expected to pay your invoice immediately. Some larger operations though may allow you to pay your invoices 10 to 30 days after receipt. Find out for sure what your subcontractor’s polices are.

What If the Client Doesn’t Pay?

If your subcontractor is charging you for a specific client-related project, and the client doesn’t pay, you may be tempted to ask the subcontractor to wait for her payment.

That said this issue is something that should be covered in your contract with the subcontractor. But even if it’s not, as the project manager, it’s your responsibility to make sure those working under you get paid, even if you don’t. It will also be your responsibility to seek payment from the client.

Take care of your subcontractors, pay them well and make sure you charge your clients enough and your business will be much more successful for it.

Communication is the foundation on which any business relationship is built. This is especially true with your subcontractors. Fail to communicate effectively with them and you risk the success of your project, your business and your ability to work with that subcontractor.

More than Just Giving Instructions

Working with subcontractors requires that, not only can you give instructions, but you must also be able to give and take feedback and constructive criticism. It’s the give and take across the spectrum of communication that makes for a successful working relationship.

And that’s not all. As the project manager, you’ll need to be able to communicate with your client as well. You’re the middle man and if you can’t communicate back and forth, then the project is likely to fail.

For example, when you subcontract out a web design project, you will need to make sure you understand your client’s goals and you want to make sure you can communicate this to your subcontractor. In essence, you’ll need to be able to speak your client’s “language” and your subcontractor’s as well.

There are several ways that you can improve your ability to communicate with your subcontractors and your clients.

Clear and Organized

The first thing you want to do is make sure that all communication is clear and organized. While verbal communication may seem easier, written communication is more professional and more easily tracked, especially if you and your subcontractor never meet. Ways to communicate in writing include:

1. Email. While email is the most familiar form of conversing in writing, it’s also one of the most unreliable. If you haven’t already, you’ll realize this the first time a subcontractor fails to complete a project, and states that she couldn’t because you didn’t answer her questions in the email she sent three days ago – but you never received.
2. Project Management Software. One of the best solutions out there is a project management software called Basecamp. This software allows you to brainstorm ideas using an online whiteboard and also allows you to communicate via messages with your subcontractors and your clients. Each party in a particular conversation receives email notifications of updates. Even better, you can login at any time to see if there are updates. And everything is kept on the Basecamp website for you to access anytime, anywhere.

Once you have a system setup for maintaining communication, you’ll need to develop a communication policy for your company.

Staying Professional

When we work closely with people, it’s easy to get frustrated and sometimes even angry. We’re all human and sometimes we don’t think. One way to help you remember what to do in these situations is to have a communications policy. The policy needs to outline appropriate methods of dealing with various situations in which you might be overly emotional.

For example:

• How do you handle a subcontractor disappearing for a few days, right in the middle of a time-sensitive project?

• How do you handle a subcontractor who completely misunderstands the instructions that you gave her, even though they are clearly written in your project management system and she read them and said she understood them?

• How do you handle a subcontractor who wants to talk on the phone, and is very chatty about non-business related topics?

These policies can also apply to how you treat your clients and how you allow your clients and subcontractors to treat you.

Follow Through

Making sure you follow up on your communications is just as important as a batter following through on a swing. If the batter stopped her bat as soon as she hit the ball, the ball would barely pass the batter’s box. (It’s called a bunt!) Likewise, if you don’t follow up on your communications, you often won’t get much effort from your team.

So, give your team instructions and then request feedback. And when your team has followed through on your instructions, give them feedback. If necessary, throw in some constructive criticism. And then follow the process in reverse with your client. Follow through will make or break or relationships and ultimately your business.

You’ve spent your blood, sweat, tears and time growing your fledgling service business into a successful, blossoming company. But you’re at that point where you’re going to have to make a hard decision – either scale back the growth, or bring in more people.

Deciding to go ahead and bring in subcontractors or hanging onto your “baby” for dear life is one of the hardest business decisions you’ll make. After all, you’ve poured yourself into the business and you really don’t want someone else messing it up.

But businesses are like kids. You can’t keep them in high chairs forever. Eventually, they’re going to go to school, get invited over for sleepovers and generally get taken care of by other people.

Likewise, you’ll need to learn to let go and let other people handle some of the tasks in your business, including some of your client work. Of course, that doesn’t mean you just drag over the first subcontractor you see and throw some work at them.

10 Smart Ways to Subcontract

1. Understand that building a subcontractor relationship takes time. You need to get to know your subcontractor and they need to get to know you.Before you even consider hiring someone, ask your colleagues for recommendations.
2. A great recommendation will go a long way towards insuring that you’re hiring someone who is good at what you need them to do.
3. Hire the best subcontractor you can afford, not the cheapest one you can find. You may pay more than you think you can afford, but you’ll bank on a fine reputation instead of throwing money down the drain on a bad situation that could hurt your reputation.
4. Get references. And actually call those references. If the references all give glowing reviews, you’re ready for the next step. If the references are less than glowing, you may want to find out why.
5. Check the potential subcontractor’s portfolio and website. If their own site isn’t up to your standards, chances are, their work won’t be either.
6. Consider a trial project. Contract them to do one small project and see how they handle it. If you ask them to edit a 500 word article that you wrote and they take 3 weeks, you know they’re probably not going to be a good fit. If they return 30 minutes later and have truly made the article better, you’re golden.
7. Make sure you both sign a contract. Include how much they will be paid, allowances for increases in rates later on, a point at which the contract will be re-evaluated and specific instructions on what will happen if either one of you wants out of the contract. You’ll also need to include specific information on what happens if either one of you breaches the contract. You’ll also want to include a confidentiality clause. In any case, make sure you consult an attorney before signing any contract.
8. Communicate effectively. Make sure that you provide clear instructions and that your subcontractor understands what you are wanting. If a mistake does happen or there is a miscommunication, review the situation with your subcontractor so that both of you understand what went wrong.
9. Always review your subcontractor’s work. The only way you’ll be able to ensure your company’s quality is to review the work yourself (unless, of course, you’ve hired someone to serve as a project manager and that person knows exactly what you’re looking for).
10. In the event that a subcontractor doesn’t work out, follow the instructions in the contract for termination. Don’t take it personally, don’t tell them they stink, but do give constructive feedback if they want it. Also, don’t let one bad experience turn you away from subcontracting.

Follow these ten tips and you can grow your business from a solo entrepreneurship to a company run on teamwork that handles several clients and many projects with ease.

The relationship between you, as a service provider, and your subcontractors is beneficial on both sides. The fact that you’re making your clients happy and your subcontractors are getting work is just the tip of the iceberg.

Growing Your Business with a Team

One of the most important lessons you learn as a home business owner is that you can’t grow your business alone. If you’re working alone and you can’t outsource projects to others, than all you have is a job. If you get sick, have an accident or just want to go to Disney World, you’re stuck, because you’re the only one who can run your business.

Additionally, if you’re the only one doing the client work in your business, you’re not going to have enough time to do the marketing necessary to bring in more clients. You need more clients to replace those that move on and to continue to grow.

When you hire a subcontractor, you can hand off portions of your projects, or even the whole project and take a management role, freeing up your time to grow your business, while still maintaining quality and timeliness.

Increasing Profits and Capacity

As you become more comfortable working with subcontractors, you’ll be able to add more people to your team. The more you help your clients, the more services they will hire you for and the more income you’ll be able to bring in.

Not to mention, you won’t be tied down by the number of hours you can work in a week. You may be able to only work 60 hours a week, but if you hire three subcontractors and each of them works 20 hours a week for you, you’ll be able to complete 120 hours of work per week.

Because more than one person is working on the project and each person is focusing on what he/she is good at, the project quality is better and the deadlines are easier to meet.

As your business grows, you can serve clients that you would have had to turn away if you were working by yourself and your subcontractors will have more opportunities to grow their businesses under your tutelage. A win-win for everyone.

As a successful home-based service provider you will soon realize, if you haven’t already, there are not enough hours in the day for all the projects you could be working on. You also may have discovered that you don’t have the skills necessary to complete every task your clients – or potential clients – need.

You may have already turned away clients when your project calendar filled up, sent clients to a colleague or tried to meet their needs with disastrous results. Have no worries, it’s happened to the best of us, but that doesn’t mean you’re stuck with too much work, not enough time. And there is a better way.

1. 1. Subcontractors Can Take the Extra Work

By hiring subcontractors, you can increase your workload exponentially. For example, let’s say you schedule twenty hours of work in one week for two clients. By hiring a subcontractor, you can schedule in two more clients for another twenty hours of work that week.

Because the subcontractor charges less than what the client is paying, you still make a profit on those extra hours, even though you did not do the work yourself. In this situation, you serve as a project manager, quality control officer and client liaison. In other words, you hand out assignments, inspect the work to make sure it’s up to standards and communicate with the client and with the subcontractor.

1. 2. Subcontractors Can Add New Skills

Hiring subcontractors with a complementary skill set can also help you expand your services. For example, if you are a web designer, you could hire a ghost writer to help those same clients add great new content to their websites and blogs in order to make the most out of their online presence. This way, the client can continue to work with you, and you can meet more of the client’s needs. This means more money for you, money for the subcontractor and happier clients.

1. Subcontractors Mean Less Paperwork

Subcontractors also come with a special set of benefits that you wouldn’t get from hiring employees. A subcontractor comes with their own office, their own equipment and their own training. She/he often is running their own service business and therefore has a stake in making a good name for herself – and for you. The subcontractor is also responsible for their own taxes, sets their own hours and is usually self-motivated. You only pay them for the actual work they do and you are also usually not their only client.

On the other hand, an employee needs space in your office and you need to provide them with equipment and training. While there are good employees available, you could easily end up with someone who simply wants a paycheck, regardless of whether or not they worked for it.

You would also need to set hours and pay for the hours they are “on the clock” even if they don’t have a full list of tasks that day. In other words, if there is no work, you still have to pay the employee. And then there is the whole business of withholding taxes and Social Security and other paperwork that goes along with employing someone.

Growing Your Business with Subcontractors

Hiring subcontractors can be a relatively inexpensive way to grow your business quickly and efficiently. It’s a win-win situation for you, the service provider who gets the help they need, and the subcontractor gets the work she/he needs.

Creating a positive work environment is crucial to the success of any organization. In the current challenging times, less people need to do more or the same amount of work for the organization to stay ahead. What are the strategies that an organization can apply to create a positive work environment?

1. Plan Effectively
While it is important to do a lot of research and study reports for planning purposes, effective planning should include the people involved in implementing the plan.

There are things that these people are aware of that can make a difference to the plan. Aside from that, there will be a better understanding of the plan and a sense of ownership when it is time to act on the plan.

2. Change Where Change Is Needed
Change is something that cannot be avoided. Either you change with the times or you get left behind.

It is necessary to be aware of customer needs, changes in the economy and trends in the industry to be aware of the changes. However, make changes where it is needed and not just for the sake of changing.

3. Groom Your People
Your people are crucial to the success of your business.

Groom your people to develop skills as well as attitudes and behavior required to take your business from where it is to where you want it to be.

4. Encourage Dissent
Do not be afraid of dissent. If all your employees agreed with everything, you may not become aware of changes that are happening to your customer base or in the industry. Focus will be narrow and based on conventional ideas.

Allow dissent that will generate new ideas and actions that will enhance your business.

5. Foster Leadership
You need more than management personnel to run the business. Thinking like a leader is a mindset that needs to be developed in every employee.

Every single person be it from sales, support or administration can also contribute creativity and responsibility to the roles they play.

6. Move Quickly
Change is happening so fast that it is necessary to make your move quickly. While it is important to think through your decisions, there are changes to which response has to be fast to stay ahead of competition.

7. Be Customer Oriented
Ultimately, it is your customers who keep you in business.

Be aware of your customers’ needs and wants. When they provide feedback on your products and services or require support, listen and take appropriate action.

If there are complaints, handle them. Be glad that they remain your customers despite the complaint. A complaint well-handled will get you a happier customer.

8. Take Action
While having ideas and strategies are great, a difference is made only when action is taken.

It is necessary to study and research whatever decisions you make. However, remember that often you may not get all the information you would like to have to make the decision.

Make your best judgment call and take the required action to make the decisions work out well.

Creating a positive work environment may be about environment and comfort. More importantly, it is the passion that you create within the organization by bringing people together to deliver a vision.

Keeping your employees motivated with high morale is the most important function of a supervisor. This article provides a list of actions that can be taken to keep employees producing for the success of the organization.

The first three suggestions are related to the physical characteristics of the work place:

1. Make sure that the work place is clean and well-lighted.

2. Give employees the proper equipment (furniture, computers, machinery) to perform their jobs efficiently and comfortably.

3. Design the work flow such that there are few bottle-necks and downtime.

The following are suggestions for keeping employees’ morale high:

1. Reward employees with the highest rank and status justified by their aptitude, performance, and contribution to the success of the organization.

2. Provide salary and wages based on the employees’ performance and value to your organization.

3. Provide a meaningful annual review which includes recognition for work accomplishments and an honest assessment of areas where the employee could improve.

4. Give employees effective feedback on their work, including giving reasons for work assignments, the assignments contribution to the organization, and how the assignment contributes to the success of the organization.

5. Delegate as much authority to employees as they can handle effectively.
6. Provide positive incentives rather than negative incentives.

Consider the following actions related to communicating effectively with your employees:

1. Listen to employees–really listen.

2. Allow employees to air their grievances–even if they reflect on your perceptions of your own performance.

3. Give credit for actions, ideas, and suggestions for improvement to operations. (Never take credit for actions or ideas of your employees.)

4. Organize your operations so that everyone can make a contribution by offering suggestions for improvement. Consider all suggestions seriously. If you find that the suggestion can’t be implemented, give a full reason for not adopting it.

5. Show a genuine interest in each employee without becoming a bore.

Now that you’ve been presented with a series of actions that you can take to improve the morale and motivation of your employees, here’s one more important point to remember:

Each supervisor comes into the job with a set of attitudes and behaviors that have developed over a period of years. In most cases a new supervisor needs to take stock of his or her attitudes and behaviors that might not be effective as a supervisor.

Most new supervisor don’t take the time (or even realize that they need) to assess their skills related to being an effective supervisor.

Let the list above serve as a checklist of areas where you need to make improvements to be successful as a supervisor.

It may appear that all great managers know the secret to improving an employees performance. But what these managers know is no secret at all: everything you ever needed to know about enhancing the productivity of your employees is actually contained in a few simple techniques that are guaranteed to increase the efficiency of your business.

5 Things That Every Great Manager Knows

These five things are not profit margin, gains, losses, tax deductions, or assets – but instead are the human factors of management.

You cannot put a price or value on the factors that drive an employees performance. This is because most people remain with an employer because of the quality and satisfaction derived from a rewarding and balanced workplace.

Great managers recognize and respect this “x factor” of the business world and work to improve it with these simple tips.

1. Motivation – Every employee is unique; therefore the motivation to perform better will be different for each person. Identify the motivator for each employee and provide opportunities that encourage their interest and performance.

2. Setting Goals – Make sure you have a vision for how you want your business to operate now and in the future. Communicate your vision to your employees so that they are directing their energies toward a common goal. They will feel like they are a part of the business and this will enhance performance.

3. Praise – Take advantage of big and small opportunities to praise your employees for work well done. Your recognition of their performance means a lot and it is important that you acknowledge their efforts.

4. Feedback – Be lavish with praise but selfish with criticisms -but do offer kind words of constructive feedback that makes your employees feel respected and valued.

5. Management – Be available as a resource to your employees. They should feel comfortable to approach you with questions and concerns and not feel as if they are imposing on your time. They should be able to depend upon you for guidance and as a model of what excellent performance is all about.

A Last Word…

As you can see, there is no one secret to improving the performance level of employees. You can start today with these simple tips that are easy to implement into the everyday workings of your business. After all, your employees and business deserve anything and everything that will help them flourish and continue to grow.

If you employ people in your business, you’re going to be faced with a number of tricky management issues – dealing with tardiness, sick leave, and keeping your staff motivated.

Performance reviews can be useful for motivating employees, but only if they are accurate. An inaccurate review, which fails to recognize the employee’s value to the organization, can be worse than no review at all.

If a performance review fails to take note of an employee’s shortcomings, it won’t be taken seriously. If an employee consistently performs poorly, it’s vital to document this, as well as any corrective action that is taken.

Your staff may be genuinely unaware that their performance in some areas is poor (or exceptional!), unless you tell them.

Most employers conduct performance reviews annually, in order to decide on salary increases and bonuses. Since performance reviews should build on previous reviews, it’s better to conduct them more regularly – every 4 months is a good frequency.

Employees thrive on feedback, and regular performance reviews provide a consistent framework for providing positive reinforcement.

Under-performing employees can also benefit. Regular reviews can identify weak performance areas, and allow you to set clear goals and expectations, and to coach and mentor the employee to improve their performance.

Objectivity is vital. You need to concentrate on measuring performance, and not on quirks of personality.

The performance review should relate directly to the employee’s job profile – your employees do have job profiles, or job descriptions, don’t they? The job profile should identify the Key Performance Areas for the job. For instance, some Key Performance Areas for a receptionist might be:
* answer incoming calls within 3 rings
* take messages accurately and pass them on quickly
* type at a rate of 25 words a minute

The more measurable a Key Performance Area, the better. Some other measurable Key Performance Areas include:
* number of sick days
* number of absent days
* number of instances of tardiness
* number of customer complaints
* number of customer compliments
* number of co-worker complaints

Of course, you would have to keep accurate records of all of these, in the employee’s personal file.

You should prepare a performance review form for each employee, which lists the Key Performance Areas for the job, and provides a matrix for you to record the performance in each area.

For example, you might rate the employee’s performance in each Key Performance Area against a scale of ‘Poor, Satisfactory, Good, Very Good, Excellent’

Performance reviews should be a collaborative process – as far as possible, the employee should agree with your assessment.