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Over the last few years, I’ve developed a methodical approach based on some basic lessons that I’ve learned the hard way. In this article, we’ll look at some of the core concepts that will allow you to get the most out of your contractors while fostering the long-term relationships that will put your business in a strong position from which to grow.

The article is broken into six parts:

Part 1. Finding Candidates (starts below)
Part 2. Qualification and Trial
Part 3. Managing Contractors
Part 4. Money and Payments
Part 5. Legal Agreements
Part 6. Working with Offshore Contractors

Part 1: Finding Candidates

How Much Would You Pay for the Perfect Contractor?

Large corporations spend billions of dollars on recruiting, human resources, and employee benefits every year. Many small businesses, however, fail to see the importance of quality recruiting and outsourcing techniques; instead, they attempt to just ‘make it happen’ without any budget or time allocation at all.

These businesses soon learn that ongoing contractor problems quickly become a frustrating source of stress, expenses, and client dissatisfaction. Given the fact that human resources are arguably the most valuable assets a business can have, concrete steps should be taken to avoid this pitfall.

In other words, you need to be prepared to spend money and time to find the right contractors. If you don’t spend a little money at the beginning, you’ll fork out more in the end. Most of the money will go to trial projects, with the rest spent on advertising and networking.

Even the smallest company can create an effective outsourcing plan on a shoestring budget. Here are some must-do tips for getting started:

1. Refine your goals and narrow down what you’re looking for.

   What are the skills you need? Would you prefer one jack-of-all-trades type, or three highly-skilled professionals with more specialized capabilities? Do you want an expensive, high-end contractor who can handle client communications in your absence, or would you prefer a younger, less-experienced contractor who you will need to manage personally?

2. Create a budget including some well-planned trial projects.

   That’s right, trial projects. Trial projects are the single most important thing you can do to ensure that you are working with qualified, skilled contractors (see next section for more on this). Also include advertising, phone calls, and your own time in the budget. How much is it worth to you to find the right contractors? If you’re seeking two great contractors to perform $1000-$2000 jobs, expect to pay for 3-5 trial projects of about $200 each before you find the right one.

3. Create a timeline.

   When can you put your contractors to work? Are you bursting with overflow work today, or are you getting ready for future projects? Be up-front about this with potential contracts, and make your position clear.

4. How much can you spend?

   Don’t wait for potential contractors to set the price for you. It’s critical that you have a clear idea of what your preferred rates will be, and what your expectations will be for that rate. Contractors have a nasty habit of being highly inconsistent with their rates depending on how busy they are, or how much they want your job. If you aren’t sure what a fair market rate is for a particular job, do some research or ask around until you have a number in mind. Use that figure in your assessment of candidates later in the process.

5. Got backup?

   One contractor is great, but if you’re going to go through the process of interviewing and qualifying one contractor, why not make it two? It’s great business to have a signed agreement with a backup contractor in case your primary contractor doesn’t come through or is overextended. Be sure to explain this to the backup contractor and make it clear that any overflow work will go to them -- nobody likes to be a runner-up, but most contractors will be happy to have a potential client lined up.

Finding The Talent

Great contractors are found in all walks of life, and useful business relationships can be formed through clients, family, friends, advertising, or networking. However, there comes a point when your personal network is tapped out and you’ll need to start qualifying and screening contractors that are totally unknown to you.

This process usually begins with an advertisement or other invitation for interested contractors to contact you. The level of detail that you include in your advertisement will dictate the range and quality of applicants you receive. So, be sure to state exactly what you’re looking for, and be specific enough so that applicants think twice before wasting your valuable time with an enquiry.

After all, there is a world of difference between:

“Responsible, detail-oriented HTML programmer with keen eye for pixel-level accuracy to convert Photoshop files to HTML.”

And:

“HTML programmer, must be capable of converting Photoshop files to validated HTML/CSS(4.0/4.01/XHTML) with absolute pixel-perfect accuracy, minimal direction and revisions. Please be able to check your own work comprehensively, be well-versed in browser-compatibility, and have excellent communication skills in English. All applicants must be willing to produce a trial PSD->HTML conversion to be considered for this position.”

And:

“HTML programmer, must be capable of converting 2 Photoshop files to validated HTML/CSS (4.0/4.01/XHTML) daily, with absolute pixel-perfect accuracy with minimal direction and revisions. Must be skilled at image optimization and load-time reduction techniques. JavaScript/DHTML a major plus. Please be able to check your own work comprehensively, be well-versed in browser-compatibility, and have excellent communication skills in English.

Submitted work will be checked using an automated browser-compatibility system and compared to all OS/browser combinations at the 4.0 level up. Must enjoy working in a fast-paced environment and be able to manage multiple projects simultaneously.

Excellent skills in all MS Office applications required. Multiple client references and 3 years of relevant experience required. All applicants must be willing to produce a trial PSD->HTML conversion to be considered for this position.”

The more information you can provide, the more targeted your applicants will be. Ideally, you’ll provide a detailed job description including all applicable categories from the following list:

• Professional Skills
• Communications Skills
• Office Software
• Languages
• Presentation Skills
• Business Skills
• Availability
• Career Level
• Industry Experience
• Work style and Environment Preferences
• References
• Representative Work (etc.)

A Needle in A Haystack

Placing ads can sometimes be necessary, and the location of those ads will dramatically affect the kind of people who respond.

Advertising online is extremely inexpensive, fast, and flexible. Online employment advertising is divided into two tiers, lower and upper. The lower tier consists of smaller, project-based Websites such as Elance.com and FreelanceWorkExchange.com. These sites are typically visited by less experienced contractors who are at an early point in their career, and offshore/international workers.

Advertising on these lower tier sites can result in a tidal wave of responses, some at incredibly low prices. However, the qualification process can be difficult and lower-end contractors tend to be much less successful during trial projects. If you hope to locate a very affordable contractor, and are willing to spend some time looking for the right person, these websites can be very useful. Be sure to but a comprehensive description of your trial project on the site, and include some specific qualifications that you’re looking for so that you’ll have fewer unqualified responses to go through. Then, be prepared to ignore the lowest bidders (they’ll usually be kids, or totally unqualified bidders) and invest in a series of trials with a relatively low success rate.

Upper-tier Websites such as dice.com or monster.com are considerably more expensive, typically costing at least $100 (and it goes up from there) just to list a position. However, you’ll be reaching much more experienced marketplace, with more qualified workers in general. In addition, these Websites will force the respondents to work through a restrictive system of resume submission, which allows you to easily assess the results. You might find that the several hundred dollars you invest in such a listing prove worthwhile as you locate the ideal contractor with fewer trials, ultimately saving money from your recruiting budget.

If you’re searching for international (offshore) contractors, your options are much more limited. An abundance of international contractors can be found on Elance.com, but the process of finding the quality vendors amongst the sea of newbies can be frustrating and risky. A better route is to contact a company that has experience establishing such relationships and have them make the necessary arrangements.

This allows you to have immediate access to a pre-qualified team of offshore contractors without the risks associated with establishing the relationships and qualifying the offshore team. You’ll pay for this kind of service, but it’s still dramatically cheaper than going it on your own.

In the first part of this series, we talked about the sorts of things you’ll need to plan for when you decide to hire contractors. We discussed writing a descriptive job ad, and looked at a few key locations for finding contractors. This week, we tackle the challenge of weeding through applicants to find your dream contractor.