Subcontracting to Others

Increase your capacity and sales potential by turning over work to others

By Marcia Layton Turner

When you reach full capacity in your business (all of your employees and equipment are working at 100 percent) and yet you're still turning business away, it's time to consider bringing in subcontractors — individuals or businesses that can take responsibility for part of the process and boost the amount of customers you can handle.

Subcontracting is standard procedure in government work, where one company manages the project and doles out pieces of the work to other companies, the subcontractors.

If you're looking for a way to serve more customers, start looking into subcontracting:

Identify companies that with specialties you could use, such as marketing or manufacturing
Run the numbers to be sure you can still make a profit by subcontracting
Draft a subcontracting agreement to clarify everyone's role

Turn to supplier directories

If you know that one aspect of your business takes most of your time, focus there first to find candidates to pitch in or take it over.
Try: Search the Thomas Register to find industrial suppliers and manufacturers, or the trade association for a particular function, such as advertising, bookkeeping or human resources.

Find a freelance subcontractor online

You can easily connect with top professionals online for extra help to complete projects.
Try: Guru.com can help you find help in the creative, information technology, business consulting and office/administration areas. You can either post a project or search for specific pros.

Evaluate the subcontractors' skills

To be sure any subcontractor you retain is able to perform at the level of quality you and your clients are used to, you'll want to carefully check them out.
Try: Ask for work samples, references and/or require a skills test. It's also smart to run a business credit check, which you can do with Dun & Bradstreet, as well as getting a Better Business Bureau report to make sure your helpers are legitimate.

Put it in writing

Once you've selected your subcontractors, spell out in writing exactly what they'll be doing, to whom they'll report and what the terms of your agreement are.
Try: Use a form template like this one at the 'lectric Law Library or All Law to draft your agreement, or leave the legal work to an attorney; find one at Martindale.com.

Determine which parts of your business process to subcontract and which to keep in-house. You can hire a consultant to diagnose your biggest areas for improvement, or start locally and at no cost with your local Small Business Development Center or SCORE office.
If you retain an individual to help out, be clear about their contractor status up front, and check the IRS definition to confirm the person would not be considered an employee later (which could be costly for you).