“Don’t be afraid to change horses”: The four Cs all startups need to look for when outsourcing

Ian Reilly on innovation

Ian Reilly is the founder of agtech startup Agersens and consulting company Altrutec.

As a startup or small company we’re resource strapped from the get-go. We need help for almost everything and our email and social media is constantly filling up with offers of app development, marketing, or some other service.

Doing the work well is critical to your success and the best time to evaluate a provider is during the courtship phase, when they’re trying to convince you they’re the best partner.  

Here are four key things to focus on when kicking their tyres.

1. Capability

It might seem obvious to engage a provider who can meet your needs, but under time pressure and the pitch hustle it can be easy to miss important facts. 

Don’t use a software house that does back-end systems if you actually need to develop embedded firmware. If you need accounting help look for a company that has experience with startups, not one that only helps large corporates. 

Focus on finding out if they’re strong in the skills and expertise you need. To broaden their market a lot of providers offer a long list of what they do rather than try to understand and meet your needs. Good providers will ask questions to really understand your business, and your pain, not just deliver their packaged pitch.

Being capable is about knowing the limits of your own expertise, so check if they’re being upfront about their weaknesses as well as their strengths. If they aren’t strong in any area a good service provider will try to point you to someone who can help.

And make sure they have the capability you need in-house. If they’re going to outsource the work, that only creates another hurdle to your success.  

Matching size can also be important. Your company shouldn’t be so small in their pond that your unhappiness with their service doesn’t impact on their revenue.

2. Competence

Sure, they have the right skills and experience for doing your work but are they good at what they do? They can write software, but do they write great software that’s stable and doesn’t need to be re-written at the next stage?  

As a small company you have the most leverage during the courtship period when you can check how your teams work together and see how they meet small commitments. If they don’t demonstrate competence at this stage then you can forget them for a large assignment. If you can’t trust them with small things don’t trust them with the success of your business.

Large corporates will often look at a company’s quality system to gauge competence, but there are problems with that. Firstly, if you’re a time-starved startup you can’t afford time checking through a quality system.  

Secondly, like hotel plumbing, a quality system is a sanitation metric that just indicates that the basics are in place. Having plumbing doesn’t make the hotel a good place to stay and having a quality system doesn’t mean the provider is competent.

A faster and more effective way to measure competence is to make a phone call to some of their long-term, satisfied clients. You’ll learn from direct experience — and it’s very telling if they don’t have any long-term customers. Some companies manage to survive while burning through clients because they can give a great sales pitch and maintain a distant relationship with the truth.

And make sure you’re actually getting the team they pitch you. A lot of large providers have A, B and C teams, which can result in a “bait and switch” outcome when they pitch you the A team, but then saddle you with the C team.  

3. Commitment

As an innovation consultant on a project for Coca-Cola, I once came down with food poisoning in Atlanta and spent a night vomiting in my hotel room. Since I was committed to the project and still alive the next morning, I dosed up on coffee and Coke and fronted up for another day of work at the Coke campus. We didn’t tell Coke about the episode because they’d taken us out to the fancy restaurant that poisoned me. But they found out eventually, and impressed with the level of commitment it showed, went on to become a long-term, solid client. 

As a startup founder or business leader you’re highly committed and doing “whatever it takes”. You need great people around you who mirror that commitment. 

You need people who show they understand the white-knuckle ride of launching and building a company and support you by walking in your shoes. People who see your success as their success.

Even the best outfits make mistakes, but an outstanding provider will also have a good track record for handling failure well.  Talking to past clients to find out how the provider responded when they came up short can provide valuable insight into the level of commitment they’re likely to give you.

4. Communication

Most assignments and relationships go sour due to failure to communicate, not lack of capability, competence or commitment.    

When the provider doesn’t communicate it leads to mismatched expectations, eroded trust and failure to deliver what you need. 

Good communicators check in regularly to make sure everyone is still on the same page. 

Ask them upfront how they’re going to maintain good communication and aligned expectations, and check if they demonstrate good working relationships with your team.

Look for providers who pro-actively check in with you while they prepare a proposal – frequently asking questions to check their pitch is targeted to your needs. If they don’t communicate well when they pitch for work they won’t get any better after they start.

When you’ve found a good provider don’t treat them like a pizza delivery person – someone you pay, thank, but never see again.  If you make them a valued part of your team, give them what they need to do their job well, and celebrate success together, you’ll make them part of your enterprise and incentivise them to help reach your goals.  

Good people generally have high standards and work with good companies, so ask them to recommend providers for other tasks – get their advice and make your own decision.

And if you make a mistake, don’t be afraid to change horses in the middle of the race. It’s better to get a trustworthy long-term partner than limp along and prolong the pain. And although you may think good providers are expensive, failure to build enterprise value by paying for a poor outcome is a lot more costly. 

NOW READ: The three ‘Rs’: Startup success relies on research, recruitment and a willingness to redevelop your product

NOW READ: Adelaide’s CORE Innovation Hub to bolster collaboration between startups and mining companies

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