When you’re running your own business from home, sooner or later you’ll realise that your income is limited by the number of hours you can physically work per week. What if you had a team of subcontractors working for you? Just think how many more clients you’d be able to assist and how much your business would grow. Here’s a question I received from a prospective VA about this very subject:
“I would like to sub-contract work out, even have a small team of girls that can work for me. Ideally, I would like to generate business and really work on the Marketing whilst the admin work is done. Of course, this will take time and I am able to do the required work also – but my vision is to have a VA team of girls. I don’t know how to handle the payment side. As I am working full time – I would like to have a couple of girls on standby when work comes in rather than lose it – I want to be able to offer fast turn around times. When you have had a large work load and outsourced how did you go about it?”
Here are my thoughts and experiences on subcontracting:
Having a vision and plan in place to grow your business is an excellent idea. As a solo business owner, there is an upper limit on the amount of income that you can earn. There are only so many hours in the week that you can assist clients, and take care of your admin and marketing tasks. If you build a team of VA’s that you subcontract work to, then you’re leveraging their time and of course, can enjoy an increase in income. You also get more time to market your business and attract more clients. It’s a good way of offering additional services to your client, if your subcontractors have different skills to you.
You would negotiate an hourly rate with the client, and then pay the subcontractor a lesser amount, so that you profit from the arrangement. This is to cover your time and marketing costs, because your role is to find clients and interface with them, while the subcontractor simply receives the work and completes it.
Why would there be Virtual Assistants who are prepared to receive a lower hourly rate by being subcontractors? Well, some VAs are happy to do this as a way to kickstart their businesses, and also not have to worry about the time and expense involved in marketing themselves to get the business. Some VAs do a combination of subcontracting and also have their own clients.
You also need to draw up a subcontractor agreement and have it checked by a lawyer. This will cover terms such as hourly rate, terms of payment, confidentiality and so on. You also need to include a clause saying that the subcontractor will not get paid if the quality of the work is substandard. Your lawyer will be able to help you with the exact phrasing and terminology here.
You invoice the client and receive payment. Your subcontractor invoices you for their time, and you pay them. In an ideal world, you don’t pay the subcontractor until you receive payment from the client.
It can be a lucrative arrangement but as with anything, there are some pitfalls to watch out for. Firstly, the skillset and reliability of the VA’s on your team. You’re ultimately responsible for meeting deadlines and for the quality of the work that leaves your business. You’re adding other elements into the mix now, it’s no longer just you.
What happens if there’s a deadline and you miss it because the VA you’re working with is unreliable or gets sick? The client isn’t going to be very interested in your excuses. They just want the work done. Or what if the document comes back to you and is full of typos? That’s why you have to be responsible for checking the work that comes back to you, before sending it on to the client.
Always have a contingency plan in place. Will you have the time to complete the work if for some reason your subcontractor can’t? Or is there another subcontractor that could possibly complete it instead? You have to be good at juggling many things at once when you’re subcontracting your work out to others.
Communication is another important aspect. Are you good at letting others know what you want and what your clients’ expectations are? Don’t expect your subcontractors to be mind readers. Are you good at giving feedback, positive and negative? People need to know what they’re doing right and what they’re doing wrong.
I’ve had some great experiences subcontracting work, and also some very bad experiences. It’s fantastic when it runs smoothly, and you can reap the rewards. However, when the client is breathing down your neck and you have no clue when the work is going to get done, then it can lead to quite a few sleepless nights!
I’ve also been on the other side of the fence. In the early stages of my business, I was a subcontractor to someone else to kickstart my business. It didn’t work out because the person subcontracting to me was not familiar with the software themselves i.e. they didn’t know Powerpoint at all, and so they could not really communicate the clients’ needs very well to me. I also felt that I could easily earn more by finding my own clients, and so that’s what I did. I found it much easier to liaise directly with the client to find out their requirements, rather than go through a middle man.
I think the best way to go about subcontracting is to START OFF SMALL. Outsource a few small projects such as formatting / typing a short document – nothing too major. Get a feel for how you and your subcontractor work together, how reliable they are, how good the work is. There’s no point in outsourcing if you end up spending hours correcting the work.
Be prepared for problems and obstacles. Things may not run smoothly but then again, when it does work out, there’s no better feeling. Let me know how you get on and ….. good luck!
And if you have any thoughts or personal experiences on this, please add a comment!