Using Contractors to Grow your Business

By Sean Campbell, principal technology evangelist, Campbell Solutions

This series focuses on “firsts” that new business owners will experience as they grow their business. I’ll try to distill some of the lessons I’ve learned as I grew my company, 3 Leaf, the experiences I’ve had as part of other companies, as well as some of my more recent experiences as part of my new venture. I hope that each new article will set you on a higher and more straightforward path to success.

The first article in this series was Hiring Your First Salesperson.

Many businesses use contractors but:

• Do you know how to use them most effectively?
  
• Do you understand what makes them tick?
  
• Do you understand how to motivate them effectively?
  
• Do you know what to be wary of when using contractors to initially grow your business or perhaps to sustain its growth?
  

This article will dig into the issues around utilizing contractors to grow your business. I have hired contractors for a variety of roles for the past seven years as a business or practice owner and I have learned a few things along the way that I would like to pass along.

Money, money, money
I do not mean to imply that money is everything, but appropriate and regular compensation is one of the keys to being able to utilize contractors successfully.

“Appropriate” simply means realizing that contractors are not “cheap” sources of talent in many cases. The rates contractors charge have to cover paying for their own health insurance, their own technical equipment, a roof to do business under, etc. I have seen many folks make the argument that hiring contractors is cheaper because they do not have to pay health insurance, etc. The truth is you are. You just do not have the same long-term commitment as you would with an employee and the cost is amortized across the hours the contractor charges you and their other clients.

I’ve also found that contractors who have rates that are significantly below the market minimum commonly are new to the profession or are not familiar with how to price their own services. Both imply a lack of experience that can hurt you when that contractor comes in contact with your clients.

The regular compensation I refer to is about making sure contractors do not feel as if finding out how they are paid from you is part of their job. That is part of your job in hiring them. Making contractors feel as if every invoice they send you has a 50% chance of being lost in a paperwork shuffle is no way to demand excellence on their behalf in the work they are doing.

Unfortunately, I have seen this happen many a time where someone hires a contractor and expects excellence but handles the resulting paperwork in a way that makes the contractor feel that the company he is working for isn’t serious about excellence.

In short, pay well, on time, and with a certain degree of speed of payment and you will find yourself with a much happier contract pool. It’s a very easy way to get a higher return on your investment of using contractors.

The sound of silence
Typically if your contractor has gone silent in terms of “run silent, run deep,” things are not good. If things are going well, a contractor is going to let you know. That is one of the ways they ensure repeat business. However, if things are not going well or the contractor is carrying a heavy workload from you plus other clients, your first indication is when normal communication slows to a trickle.

In short, silence is not golden when working with contractors. I generally like to hear loud clashing cymbals of happiness instead.

So feel free to demand regular and ongoing status checks from your contractors. You do not have to respond to each one or set up regular calls. However, having an inbound email or phone check in every week or so depending on the tempo of the work is something to expect.

How they present their problems to you is how they will present them to your clients…
I have found that the first time a contractor, runs into an issue that they need to tell you about and they can’t find a way to handle it 100% professionally, you can bet that how they might be interacting with your clients will only be worse. You have the benefit of money and the original contract on your side. If you feel that, early on you are hearing “dog ate my homework” types of excuses on the earliest deadlines or deliverables, then let that contractor go.

Reasonable work stoppages exist, of course, but it is much better to be more demanding at the start and see how the contractor reacts. If you are paying well and communicating well this will not be an issue.

Part of the team
The funny thing about contractors is that most have a bit of built-in schizophrenia. They have this pressing need to be independent and be valued as an outside resource, and yet still be seen as a valuable extension of the team they are working with. Because of this, it is important to let your contractors know what type of positive impact they are having and being proactive about it.

Typically, folks treat contractors as folks that do not need review points, status checks and pats on the back. The most common rationale is that “as long as I’m paying them, they know that they are doing a good job.” Others say, “If I pump up their ego too much they will charge more on the next go around.”

If you think this through, it does not make a lot of sense. A contractor is a human being just as your employees are. You would not assume (or at least, I hope you would not) that just simply because you pay your employees you expect them to do a stellar job.

Motivation is a complex thing, one part monetary, one part emotional, one part communication, one part reasonable yardsticks for performance and so forth.

Realize that while money is perhaps an even more powerful motivator for contractors than for employees, it does not cover 100% of why they get up in the morning. Understand how to motivate your contractors on other levels and it will save you money and allow you to get better performance out of the contractors you use.

In conclusion
In sum, realize that contractors can be a huge accelerant to your business if you utilize, oversee and motivate them properly. Keep those things in mind and you can go a long way as a business or practice owner.

Next month’s column will focus on the question of whether you really have to grow your business. It’s more of an open question than you might think.

About the author
Sean Campbell has been a successful entrepreneur since 1999. Sean was a founding member of 3 Leaf, a company he grew over a period of six years and eventually sold in 2006. He has a long history of working on a variety of consulting projects focused on technology evangelism efforts with Microsoft, Intel and other companies. He also has been lead author of three books: two for Microsoft Press published in 2003 and 2005, and one for Intel Press in 2006. You can reach Sean at sean@campbell-solutions.com or read either of his blogs at blog.technologyevangelism.com or blog.campbell-solutions.com.