By Brad Shorr

Handling business functions internally is dangerous if a small business lacks the appropriate expertise. However, outsourcing business functions to the wrong firm is even more dangerous – and it happens all too often. Many self-proclaimed “experts” are in fact no such thing; they use yesterday’s best practices, provide sloppy execution, and/or make their top priority collecting fees. How, then, does a small business find a competent, reliable outsource?

Hire Someone You Know

Many companies may put on a good dog-and-pony show, but that just means they are sly as a fox, not smart as an owl. If you know someone in the field, you probably have a good idea if he or she is capable of producing what you need. In addition, you have an immediate trust factor that could take years to develop with a complete unknown.

They say you should avoid mixing business with pleasure, but in my experience, outsourcing to friends has been productive far more often than not. Still, consider carefully the ramifications of outsourcing sensitive business functions such as finance – How much do you want a friend to know about your income and business success (or lack thereof)?

If you don’t know someone, canvas your personal and professional networks for referrals. The friend of a friend is still a more promising option than a complete stranger.

Vet Firms Fully

Whether you are outsourcing to an unknown company or someone you know, be sure to vet the company and/or the person thoroughly. The search for an outsource vendor requires covering a lot of bases, and skipping any one of them can lead to a disastrous choice. Here is a general checklist:

  • Bandwidth. Does the company have the time and internal resources to handle your business with care, or will you be a small fish in a big pond?
  • Communication. Does the company respond quickly, thoroughly and courteously? Will working together be easy and comfortable?
  • Experience. Has the company proven itself over a long period of time?
  • Expertise. Does the company have the necessary training, degrees, certifications, etc.?
  • Fees. Does the company charge a fair rate for its services? Fees that are too high or too low are danger signs.
    Financial stability. Is the company financially sound and likely to stay in business for years to come?

Different issues need to be covered for different specialties – accounting, legal, human resources, fulfillment, marketing, etc.. We have written extensively on vetting issues that pertain to marketing; plenty of additional authoritative articles are available online to teach you what to ask for other types of outsourcing

Use Online Resources

Thousands of online resources help match small businesses with outsource talent. The question, of course, is which online resources can be trusted. An online firm that’s really impressed us is Clutch. Our agency recently obtained a listing on its site, but not before Clutch put us through the wringer! In particular, Clutch actually phoned our references, talked to them for close to half an hour, and then posted transcripts of the phone interviews on its site (slightly edited for length). This level of thoroughness takes Clutch to the level of a personal referral – maybe even higher.

When considering an online resource to identify an appropriate outsource firm, Clutch is a good benchmark: Some directories are easy to get listed on, and others, like Clutch, are quite exclusive. Generally speaking, the easier it is to get listed on a directory site, the less reliable it is. The best way to find out how easy or hard it is to get listed on a directory is to put your own company through the listing process. Doing so will not only give you insight, but may produce sales leads as well.

Use a Multi-prong Approach

If you’re not sure which method to use – finding a known quantity, conducting your own search or using an online resource(s), I have an easy solution: Use all three. Hiring the first outsource firm that comes along is often tempting. However, taking the time to compare a known quantity/referral, an internal search candidate and an online directory candidate is almost certain to result in a terrific choice.