Small Business Sunday: Outsourcing Challenges

Hello everyone and welcome to another Small Business Sunday! In this edition I’m excited to talk with you about a topic that I’ve learned a lot about over the last few years through my own experience, outsourcing. I thought the best way to share the challenges of outsourcing with all of you is to discuss my own trials and tribulations and how I’ve move to a better model. Before delving-into my own experience though I thought it would be helpful to identify when you need to outsource or at least scale your team.

Outsourcing comes-into play when you have built a business that is generating more money and taking up more of your time. At a certain point you’ll hit a wall where there are literally no more hours in the day yet there is a lot more that you could be doing. While you can try to do it all yourself, if you really want to scale, you’ll need to build a business that’s more than just you. In my case, I not only wanted to scale, I also wanted to pull myself out of the day-to-day operations of my business and use a portion of my profits to grow the business. The important thing to realize with any business is that while you can keep all of your profits yourself, using some of those to build your business could increase your revenue dramatically and allow you to run a business rather than work for one.

So here’s my personal experience, hopefully you can learn from some of my mistakes, as well as my successes to find a model that works best for you. Please understand that I’m really not trying to tell you the best way to run your own business but instead sharing my experience and hoping that some of it will be relevant to your own business. Nobody can give you advice on your business unless they take the time to properly understand it, you, on the other hand can learn from other businesses and determine how this fits in with what you’re doing, and how you might be able to scale. Okay, now onto my experience with Outsourcing.

It all started back in 2009, I had a good group of websites generating a strong stream of passive income. Every time I would create a new site I would end-up creating more work for myself. I had to keep adding fresh content, continue to analyze my ads and determine which were effective and which weren’t, look at my traffic and search engine rankings and make sure things were moving in the direction I had hoped. While the revenue was scaling, I was running out of time.

Since I have a day job which I love and which involves traveling all over the world (something that I also love) I knew that quitting my job wasn’t the answer. The money was there but sitting at home all day in front of my computer has never been a dream of mine. I realized that to scale I had to take a percentage of my profits and begin paying someone else to do what I was doing when I launched each brand. I started-out using eLance and oDesk and quickly found that I liked oDesk more, they had a unique system that would allow me to view screenshots of my contractors screen’s while they were billing me for time on a project.

I searched on oDesk and found someone that looked like they could handle everything that I was doing at the time. The price was right, I did a Skype interview which went well, and so before I knew it, Linton Investments had a new team-member. I began training this person in all the things I did on a daily basis, they said they understood and seemed very eager and excited to get started. The first week went by and while the quality of the work was “okay” it was far below what I would normally provide. By the end of the first month I could see that the person was really only strong in one of the many areas where I needed them. At the end of the day I was spending so much time fixing the work that they did, I was actually creating more work for myself.

This is the first time I had to fire someone from my business but the decision was very easy to make. What I’ve learned, which might not be true for every business but definitely is for mine, is that you can’t let emotion get in the way of making a good decision for your business. If I continued to pay someone that was doing poor-quality work I would be losing money without doing anything to generate more money. While you can invest time and money into training someone, this doesn’t make as much sense with outsourced workers that you’ll never see in person. So I delivered the bad news, in as nice a way as possible and in the end we parted on good terms.

What I learned from this experience is that I probably wasn’t going to get someone that had solid skills in all the areas I was looking for, I’d have to find multiple people, each talented in a different skill. So I found a graphic designer, a content writer, an HTML/CSS guru, and a PHP developer. I thought I had really figured it out at this point because now everyone was doing what they had expertise in. Everything started out great, my businesses was streamlined and we were running faster and more efficient than ever. Then I noticed that my graphic designer started putting-out lower quality work, in fact a lot of the custom unique designs looked copied or generated from clip art. I had to let them go and hire a new graphic designer. With the new designer onboard things were fine for a while and then my content writer started to lag in the time it took them to write articles, at the same time I had found my PHP writer was using code copied from a book.

Pretty soon I was spending more time managing people that building my business. I was hiring and firing over and over and constantly finding that after a few weeks the quality would degrade in one area and I’d have to re-hire. In the end I was able to find a great HTML/CSS guru and PHP developer but I was cycling through graphic designers and content writers like it was going out of style. That’s when I made a big realization – I just couldn’t outsource everything, and I couldn’t manage everything.

I had this realization last year and decided to hire someone here in Los Angeles along with three content writers in the US. I kept my HTML/CSS Guru and my PHP Developer and still have these guys onboard today. The guy I hired in Los Angeles became an essential part of the team as did the content writers which have now grown to a size of five. The two additional content writers I hired are for specific sites that they have expertise in.

So what did I learn after all of this?

You can’t outsource everything. At the end of the day you can’t outsource it all, some things do need to be done with people in your local country, people you can talk to on the phone and even meet in person if you really want to go-over something in detail. That being said, you can still outsource some things, but it can take time to find good people. This year I was lucky enough to get connected with Team Launcher run by my friend Jodi. They have honestly been the missing link I’ve been looking for and I’m getting ready to move the rest of my outsourcing needs over to them. The need they fulfill is to do the hiring and monitoring of your outsourced employee for you. While it may seem like an easy task to hop onto oDesk and eLance and hire someone with the right qualifications, keeping track of what they are doing and ensuring a high level of quality can be a lot of work.

Every year I feel like I make one more breakthrough, another optimization that allows me to stay strictly strategic and outsource the tactical parts of my business. I am confident that by the end of this year the only tactical thing I’ll be doing is this blog as everything else will be either outsource or done through staff here in the US. You see, my dream has never been to work from home all day, my dream has been to build a business so that I can travel the world and continue to grow my income whether I’m involved in the day-to-day or not. I thought outsourcing was the answer, and I think I was half right, but there’s really no replacement for having quality people here in the US complimented by an outsourced team that is managed by someone I trust.

Now it’s time to ask yourself the question, in scaling your business are you creating more work for yourself, or building a business that just needs more people? If you need more people outsourcing could be part of the answer, but hopefully you can learn from my experiences and take a path that leads you where you want to go. As always I’d love to hear from you! Comment and let your voice be heard.

{ 7 comments… add one }

  • Mark August 14, 2011, 9:27 pm

    Hi Morgan:

    Just thought I would clarify that outsourcing does not always refer to contractors out of the country. Outsourcing simply means hiring professional help outside of your company as in not an employee.

    Reply
    • Morgan August 14, 2011, 9:39 pm

      @Mark excellent point and agreed. In this case I really am talking about Outsourcing outside of the US.

      Reply
  • James August 14, 2011, 11:39 pm

    As you know Morgan, I’ve had very similar experiences. I now hire university students for all writing jobs and only outsource code and design work (and even that I try and limit). The biggest issues were consistently delayed delivery, poor final product and poor communication.

    I’ve been very happy switching to local freelancers and, while I’ve seen an increase in price of about 50% per article versus outsourcing, the quality, communication, and delivery time has been superb. I get better quality work, delivered when I need it, and I get live, easy access to my writers.

    I’ll have to pick your brain about your experience with Team Launcher at some point!

    J

    Reply
  • Logan August 15, 2011, 9:59 am

    Yeah, technically speaking most of what Morgan wrote about was “offshoring” the labor to citizens of other countries beyond your own.

    Reply
  • jodi August 15, 2011, 2:31 pm

    Goodness another write up about TL, thanks Morgan.

    Look guys at the end of the day we’re all still dealing with humans. I think the unique thing TL brings to the equation is we hold ourselves accountable for the actions of our employee’s. Sure, there are day’s when they’re sick, don’t show up, mess up an assignment or quite! But when this happens I step in as your Tylenol, make your headache vanish and help get things back on track.

    Back in 2007 my most popular position to lease out was…can anybody guess?!? A writer! But today all people demand are designers and programmers. The world is under development and it’s so cool to help so many of you get your projects and businesses underway!

    Let us know how we can help make a difference in your world: jodi@teamlauncher.com

    Reply
  • Kevin August 16, 2011, 1:49 am

    Hi Morgan,

    I believe in outsourcing but only on an “as needed” basis. One content writer would have the same writing style, graphic designers will bring you the same graphics, and so on. Outsourcing full time like you did was pretty much just like hiring employees. This can be a pain because you have to keep up with them plus the running of your business.

    I like outsourcing projects. This way the source you choose agrees that they clearly understand the task at hand and there will be no financial obligation if your clearly stated expectations are not met.

    Here’s an idea: Hire one person here in the U.S and his/ her job is to deal with all the outsourcing. This will free up your time and now you only deal with one person rather than 10.

    Reply
    • Morgan August 16, 2011, 7:36 am

      Hi @Kevin – great feedback and very true! I did try the approach and did have someone in the US managing the outsourced team, unfortunately this took-up a ton of their time so I lost the value of having an employee in the US. I honestly feel that Team Launcher is the right solution for me since I do get one person managing all outsourcing tasks so I can have my US team focused on doing great work for the business.

      Reply

Leave a Comment