HomeNOW ON DEMAND: Part 2: Letting Go in Order to Grow: Growing Your Business by Outsourcing -
NOW ON DEMAND: Part 2: Letting Go in Order to Grow: Growing Your Business by Outsourcing
Bob Schiers, Founder & President, RAS Associates, LLC
Michelle Olson, APR, General Manager, Fingerpaint
Documents Shared by our Panelists (on the IPA website):
- Code of Conduct_USPR (Bob Schiers)
- Freelance Agreement (From Michelle)
Last month we held Part 1 of the Letting Grow In Order To Grow series which focused on growing your agency into a practice with employees. This month we focused on outsourcing or using subcontractors. I urge you to listen to the whole program, but I’ll give you a few highlights here.
The benefits of outsourcing: time savings for you, growth opportunity for your business:
Michelle: Now I run a much larger agency we still use 1099s but the two main benefits I think is managing time, and growing your business. Time savings is most important I think, time is the most valuable commodity you have as an entrepreneur; there are only 24 hours in the day. If we all get 24 hours and we spend 8 hours working, take off 4 weeks per year, that leaves 48 weeks of work time at $100/hr or so — that earns you $192K/year which is a really good income. If you assume you’re in the 30% tax bracket, you’ll lost $60K to Uncle Sam.
From a business perspective I like to consider the use of contractors as passive income – you’ll make more money if you strive to bill out your contractors the same as you bill out – but you need to have a reasonable markup for the return; maybe 50-75% of your billable rate. Remember that pound for pound contractors are more expensive than employees – we might pay them at $30/hr + benefits, but the flexibility subcontractors afford you might be a better choice because 100% of their time is billable.
It also allows you to take on longer term projects. My first year in business I drove across country on vacation and I had to work the whole time. You need to plan for vacations.
We took on the Glendale arena – it was just me and a contractor but we won the contract and it was a huge project. You also benefit from additional specialties. You double your network within the industry in terms of media relations for example.
How to find quality subcontractors: resources, what to look for, red flags:
Michelle: Yes, it’s so important especially if they are client & media facing – do they share your core values? Do they have the flexible schedule you need? We didn’t do investor relations or public affairs or SEO – you can look for these specialty areas in your subs and you’ll have more breadth and also learn from these folks. But you can also look for a clone of you to simply extend your reach. Don’t put all your eggs in one basket, if you’ve got 40 hours, bring on 2 people in case some unexpected happens. Keep accounting/bookkeeping close to the vest. If you can, find someone you trust for book keeping and travel planning –you’ll really be able to focus on the business vs. spending time on billing, and other infrastructure issues.
There are numerous resources – there are more independent contractors than ever before – work your PRSA and IPA network to build relationships with these people, there’s a lot of really good talent out there. Networking is #1 – share leads with other freelancers and contractors – sometimes you may have a new business opp but it’s not a perfect fit for you , that’s a good opportunity to make a referral. It’s like a pay it forward that may come back to you some day. Don’t forget to ask for referrals from media partners and even agencies. “If you have overflow work, please think of me.” OPPORTUNITY ALERT: Michelle said she’s looking for writers! If you’re a writer get in touch with her.
Resources for finding freelancers: LinkedIn is the obvious source, but don’t overlook your other social media. Here are a few additional resources that can help:
PRSA, IABC
- Upwork.com
- Elance.com
- Freelancer.com
- Thumbtack.com
- Toptal.com
What should we be looking for – any red flags we should be paying attention to?
Michelle: Someone to fill the gap you’re struggling with – (what she said before) – extend you or complementary skill. We’ve outsourced a lot – writing is the biggest area, we have a lot of genres (blogs, tweets, we are more content marketing); ask for references, get work samples. You really want that cultural fit even if they’re not employees. Red flags: A couple of contactors have not been so ethical – if your sub is asking for business from your clients, if they refuse to sign a freelance agreement (I provided a sample of ours – it’s been legally vetted and it scares people from taking our clients) – If they’re not keeping you in the loop with your clients, if they’re missing deadlines also – if they misrepresent themselves to media – make sure it’s clear they’re pitching on your behalf. Avoid muddying the waters. It could turn a good relationship sour.
Working through the fear of letting go: how to trust your subs:
Bob: I’m a perfect match for this topic because I’ve been in business 30 years and I was a notorious micro manager, I didn’t want to let go. I didn’t think of it as fear, I felt I could do it better – and boy was I kidding myself. It took me years to figure out that micromanaging was no way to run a business. I was a repeat offender (in terms of repeating instructions) – I needed to trust that they were true professionals. If you’re going to work with subs & vendors on a regular basis, you need to let go and let go soon, and put your trust in those subs. In order to trust your subs you need to vet them, check your references, and do your homework. Do a google search on them, equally important, do a social search.
If you’re developing a mid-long term relationship with your sub, integrate them into your team – involve them in staff calls, pull them in from a business standpoint so you can learn more about each other.
What are the best arrangements? (Contracts, letters of agreement):
Bob: Contracts/Letter of Agreement are absolutely critical when working with subcontractors. Be sure that whatever form you use has gone through some form of legal review – mostly for state law. If you can’t afford an attorney, look through things like Legal Zoom where there are low cost options – this is just so important to protect yourself and your clients. Make sure you detail your code of conduct and ethics – PR network is where I got my baseline. This is really really critical – just when I think I’ve heard everything, I hear something even more shocking. So this code of conduct is really important and also helpful to your subs. Today in our digital 24/7 world, I am a firm believer that personal time is almost non-existent any longer. If you do something offcolor on your own time (or theirs), it doesn’t matter – it reflects poorly on you and your business. Compensation details, travel, expenses approval policies, etc. also should be spelled out.
It’s good to have non-compete language but laws vary dramatically from state to state. Most states will honor a 90 day – I don’t know of any that honor a 1-year and some states don’t honor them at all. I had one client come to me asking if they could hire a sub of mine – make sure you have a pathway in the event that happens. Hold as many team calls as practical – integrate them with your system. If you can afford ½ hour of their time to listen in on client input they’ll perform better for you.
Here are some resources for management software you may find useful (mostly free or free trial)
Google Tasks: https://www.gmail.com/mail/help/tasks/
Libre Plan: http://www.libreplan.com/home/
Project-Open: http://www.project-open.com/en/solutions/enterprise-project-management/index.html
Sqwiggle: https://www.sqwiggle.com
Active Collab: https://www.activecollab.com
Assembla Portfolio: https://www.assembla.com/portfolio
Central Desktop: https://www.centraldesktop.com
Confluence: https://www.atlassian.com/software/confluence/
Kapost: http://kapost.com
Producteev: https://www.producteev.com
Kitovu: https://kitovu.com
KanBan: http://kanbantool.com/time-tracking
LOW COST OPTIONS
Psoda: http://www.psoda.com/cms/home
Aback 360: http://www.siriuslogiciels.com/en/products/abak/introduction/
TrackerSuite: http://www.trackersuite.net
Unanet: http://www.unanet.com/content/products
Klokwork: http://www.getklok.com/KlokworkTeamConsole.html
CubeAnywhere: http://www.cubeanywhere.com
AcuNote: http://www.acunote.com
All are free or free trial – they are all really good management software to manage clients and subcontractors. Lower cost tools include Aback 360, Tracker Suite, Klokwork, Accunote – these are wonderful resources that are low cost. I’m not going in to high cost resources because I didn’t feel that would be practical for today’s call.
Our panelists invite you to contact them if you have any questions (and don’t forget Michelle is looking for writers!)
Michelle A. Olson, General Manager
molson@fingerpaintmarketing.com
(480) 368-7999
Bob Schiers
President & Co-Founder of Unified Strategies Public Relations Network
Founder of RAS Associates
(888) 214-9444
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