The Only 4 Things You Need To Know Before Kissing Your Money Goodbye To Outsourcing

In the past year I spent this much on outsourcing to individuals through oDesk for my information/purely online business(it does not include services, agencies or elance):


Not a TON, but enough to share some insights with you before you go giving your hard earned money to someone else.

The 4 Things I Learned From $26,757.45 In Outsourcing

#1 – Treat Them Like You Pay Them

I recently had to let one of my outsourcers go. Things just weren’t working out.

It was a real shame, nobody likes to have to fire someone, but more importantly – I really got along well with this particular staff member.

You could say I saw us as “friends” even.

I trusted them, I felt they trusted me.

To my utter surprise, I woke up one day to several incredibly vicious emails. I have a pretty thick skin (I mean, I have been a full-time IMer for some years now – I have read my fair share of loony and hateful emails) but this one was personal and on a level I had never read before.

You might not find this terribly unusual, but here is why I shared it:

I kept this person on for weeks longer than I should have, because I thought of us as “friends” – even though we only knew each other through oDesk. Had they been any other contractor, I would have dumped them the second they stopped performing or had become useful – but my emotions got in the way and cost me $1,000 and hours of headaches and stress.

When I got that email, I realized that when the money stopped coming from me, they stopped caring. Trust me – MOST of your workers are going to be this way (though hopefully not so crazy in their emailing).

They see you as their boss – no matter how you view them.

When you pay someone to do something, they are your worker, nothing more. Don’t treat them like your friends, don’t treat them like your spouse and if you pay them for their time, then remember this:

Once you pay them, you don’t owe them anything more.

Which leads me to my next point.

#2 – You Need To Constantly Justify Your Expense

Let me paint you a non-hyped, realistic picture of what outsourcing is.

Outsourcing is giving someone else your hard earned money.

Plain and simple.

What you then have to do as the entrepreneur is somehow justify this.

You have to be able to answer this question with a resounding answer:

“Why am I giving this person my money instead of spending it on something else? Things like fun stuff, my family, food and shelter etc.”

If you can’t come up with an answer that is so obvious it hurts, then you don’t need to be spending the money.

Even when you are successful, money doesn’t grow on trees. It is an inherently limited resource.

Every dollar you give to someone else from your pocket, is a dollar that you can’t use for what you really want.

And don’t forget this all too important tip:

Just because you could justify the expense 6 months ago – doesn’t mean you can today.

Constant fine tuning and refinement of your staff is what will take you to the next level.

#3 – Plan First. Hire Second.

There is nothing more exciting to me in the entire world than hiring a new contractor.

It represents a new beginning, it represents new growth and it means that I get to interview a bunch of people (I really should have just gotten a job in HR…).

Over the years it has also come to represent (at an ever growing rate) a time of serious planning and strategizing.

Now, before I hire ANYONE, I sit down for several sessions over the course of about a week or two and build out a complete step-by-step mindmap of processes and workflow using the free mind map software Free Mind.

For example, here is one I just made for a new VA position I have opening up soon:


This visual representation saves me from hassle in two ways:

My contractor doesn’t need to be told every 5 minutes what is expected of them


It allows me to hold my contractors accountable.

The worst thing that you can do is hire someone and say:

“Rank my site.”


“Make it look nice.”

Here is what will happen 10 times out of 10 if you do it this way:

Your contractor will do what they think is right – which will ALWAYS be the easy way, not necessarily the right way.

You put an incredible strain on the working relationship because by the time they show you what they did, you are already disappointed.

You will end up burning through more money than you thought possible as your contractor continues to bill you whilst they “figure it out”.

If you aren’t controlling the rudder to your ship, then you need to park your boat until you can figure out how to sail.

#4 – Hire Slow. Fire Fast.

Maybe it is just because I am an emotional guy or something, but I want to hire every single person who applies to my job postings. I have a soft spot for people who say, “Please.”

But this is the 21st century we are talking about now.

Customer testimonials can be faked.

I once hired a development company to make a plugin for me. I hired them too fast.

I should have recognized that the 23 jobs that they supposedly did “great work” on – weren’t actual customers. Empty profiles with all the same terrible writing style.

Bad move.

Even if testimonials are real and the person has a glowing profile of worker bee wonderfulness – it doesn’t mean they can perform today.

We are all human beings. I even see in myself the ebb and flow of work ability. I am a titan of workaholism in the winter, but when summer rolls around…

The same goes for prospective contractors. This is why I now test every single applicant before I even do a formal interview.

I pick out the few with impressive resumes, then I pay them $5 – $10 bucks to complete some skill intensive task.

For example, with the VA – I might ask them to go find me 100 copywriting blogs that I could guestpost to. I would look at their work, determine if it passed my standards and then compare their work with the 5 – 10 other applicants I had do the same job.

Side Note: I am not a lawyer, but I am pretty sure it is illegal to ask prospective applicants to complete tasks to compete for a job without pay. And even if it isn’t, that is just a jerk move.

With this simple system I have been able to avoid some serious mess-ups. People who had glowing reviews that seemed legit, but when tested were a total joke. It is well worth the $100 of testing for each new job opening.

Once you do have your talent though, the struggle isn’t over.

You need to set performance standards.

Listen, people who are applying for your job opening on oDesk aren’t exactly the cream of the crop of talent and hard work. A large majority of those that will be applying have deep seeded issues as to why they don’t have a regular job – even the overseas workers.

That might offend you, but just think about it for a moment before you blindside yourself in the hiring process.

Without standards, your workers are going to waste your money (as mentioned earlier).

When your worker isn’t meeting those standards, tell them.

There are many different routes to go from here, but once I tell someone they aren’t meeting my standards this is normally what follows:

If they don’t acknowledge the shortcoming with some sincere effort. I just let them go.

No. They can’t have my money.

If they do acknowledge the shortcoming, I ask them why.

If they say that they don’t understand – I jump on skype and we work through the problem until they get it.

If they say it is because:

Their power went out.

They had to pick their kids up from school and things got too busy.

They were sick (again).

I turn to my gut. If they really are struggling, I am happy to provide assistance to make it better. I once purchased one of my contractors in the Philippines a brand new computer because his was breaking all the time.

You have to understand, if they have made it past my rigorous “slow hiring” methods, then these are talented people. I WANT to do what I can to keep them.

But, if my gut tells me that they are just screwing around, or if I see that they have accepted too many jobs on oDesk and that the real reason they aren’t following through is probably because they took on too much.

I let them go.

This isn’t a game.

Once you have been a self employed entrepreneur for as long as I have, you realize just how fast those cash reserves can dry up – and when they do, it gets ugly.

Save yourself and your contractors the trouble by being a better hiring manager.

Don’t Forget You Have The Power Within Yourself

It doesn’t hurt to go an extra week or two juggling your business by yourself. As a matter of fact, if you follow the three tips I shared and honestly ask yourself those questions and make plans BEFORE you hire someone – you may find that you don’t need to pay someone else after all.

There have been countless times this past year where, after creating the plan and pondering that question, I realized that I could do it myself – I just needed to fine tune the system.

And there is no better feeling than keeping your hard earned money and spending it on things you actually want.

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6 Comments The Only 4 Things You Need To Know Before Kissing Your Money Goodbye To Outsourcing

  1. Franky

    Wow, that was a heartfelt, honest and important post. I have the same tendencies and have hired people with the same results; lots of money spent, no results, unhappy clients that wait too long for delivery…then damage control. It does get ugly.
    Good advice for everyone, thanks.

    1. admin

      Thanks for your comment Franky.

      You bring up a good point that I didn’t mention.

      Damage control.

      Here lies another reason to treat your workers like workers and not like friends. Because when the dust settles, it is YOU left standing holding the torch. Your workers have no liability, they don’t care what happens – they just want to get paid. But your business requires that you stand by it come hell or high water.

      Thanks for pointing that out, and thank you for reading.

  2. Mark

    Great post, Mike.
    This reaffirms my personal philosophy about being the “boss” – you don’t have to be a jerk but you do have to be in charge. Remember that you’re running a local marketing BUSINESS, not a local marketing CHARITY.
    Do you offer your outsourcers any type of incentive bonuses when they go above and beyond?
    Thanks for sharing.

    1. admin

      Thanks for the comment.

      You know, I used to do the incentive thing – but not anymore.

      You make a good point about this not being a charity – I would even go as far as to say that it is our duty as captains of the ship to ensure that it stays afloat – no matter what – so we can all keep on sailing. If I have to be a hard nose to make sure someone has work to come to next week – it doesn’t make me feel so bad. In smaller teams like the ones I run, it only takes one bad worker to bring the whole ship down.

  3. Trish

    Thanks for the great info Mike – i’m a noob and have never outsourced before (no need yet! 🙂 so this is great info for me to keep in mind. 🙂

    1. admin

      I am glad you found it helpful!

      Outsourcing can be one of the best and one of the most stressful things you can do when running your business. Planning is crucial!

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