Archive for the ‘Subcontracting’ Category

Do You Ever Subcontract Your Client Work?

Do You Ever Subcontract Your Client Work?

A very sweet, sincere person wrote to me asking if I ever subcontract any of my work.

She indicated that she has all the experience and qualifications to make the leap to becoming an Administrative Consultant, but hasn’t quite mustered the nerve yet, and was hoping to start off by working with colleagues and for a trusted source first.

Without mentioning names, I share this here to help her and others who are in the same boat.

My answer is that I don’t ever subcontract my clients’ work. I’m highly opposed to that.

I have a couple people who support me in my business, however. We work in an ongoing partnering relationship the same as my clients partner with me, and they pretty much take care of all my needs.

Did you catch the distinction there?

Do you understand the difference between farming your clients’ work out to third parties and having people support you in your business?

If not, please do ask because it makes all the difference between turning your business into just another low-value, commoditized McDonald’s and a high-value partnering relationship where you can command top dollar.

The other thought that pops up for me is that helping others start a business is a little like helping drug addicts.

Don’t laugh; I’m serious, lol.

Because we can only point people to information and resources and give them the right advice, our best advice.

But when it comes down to it, they have to want “it” for themselves (whether that’s sobriety or the self-determined lifestyle of the entrepreneur), and they have to want it bad enough that they just say enough is enough.

So in this case, the lack of nerves, shyness, etc., eventually a person just has to get sick of letting those things hold them back and just charge forward, come what may.

(Does my analogy make sense now?)

In the meantime, here are some other ways to get your feet wet:

  1. First, it has to be said that the best way you’re going to figure out things in your own business is by working with your own clients. There’s just no way around that. Working for others may help bring in some cash, but it’s not a substitute for building your own business and brand and going through your own processes and trials and errors that go with that. All you’re doing working for others is finding excuses to delay the start of your own dreams.
  2. Confidence is a journey. It’s not something any of us necessarily has right out of the gate when we start our businesses. It’s something we all struggle with to some degree and/or at some stage or another. It’s completely normal so you’re in good company! What you’re really feeling is discomfort with the unknown. So, as they say, you want to get good and comfortable with feeling UNcomfortable. Because if you let fear and discomfort hold you hostage, you’ll never get anywhere (in business or life). Confidence comes from actually doing. That doing is where you’ll begin to learn and understand. It the where you’ll have your greatest a-ha moments and figure out what you want in your business and how you want to do it, and your confidence grows from there.
  3. Even if you haven’t opened your doors yet, go do some local networking. It will be good practice in talking to people and making friends with strangers. Because when it comes down to it, that’s really all it’s about. And that’s how you’re going to get clients, too. When you meet people, you can even be honest and say that your business isn’t open quite yet, and you were just looking to meet other business people and see what kind of administrative needs and challenges they had. That would be a great conversation starter AND you’d be getting some valuable market research at the same time. See, feet wet.
  4. If you’re dead-set on working for colleagues first to get your feet wet, you gotta be active and let yourself become known. The way to do that? Actively ask questions. Contribute to conversions and discussions. If you never speak up, no one is going to see you, much less get to know you. And that’s how colleagues hire other colleagues when they need help… by getting to know, like and trust them and seeing what they’re about. This is how they get a sense of what your skills and strengths are. That only happens if you’re making yourself visible. (This is the same way clients hire us, by the way.)
  5. Class matters. This isn’t directly about how to get your feet wet, but it still bears mentioning. And that is, your manners speak volumes about what it will be like to work with you. The person who contacted me was personable while being professional and she thanked me in advance for my time and consideration which she valued. I really appreciated this because it demonstrated a high measure of polish and class and that she wasn’t just thinking about herself and her needs. These traits are going to serve her very well in business.
  6. The right information will give you more confidence. What I’ve learned from my own journey and what I’ve seen in my 10 years as an industry mentor, when people haven’t gotten the proper information first, when they haven’t gone through the process of setting up proper business foundations, that’s when they have the least confidence and the most fear. Once they arm and back themselves with the tools, information and learning, that’s when their confidence flies, trepidation dissolves and they get excited and can’t wait to get their business started! You can get ALL of this, all the contracts, forms, processes and critical business skill learning guides you need to soar in the administrative support business from the ACA Success Store.

Dear Danielle: How Do I Approach Clients About Subcontracting Their Work Out to Someone Else?

Dear Danielle: How Do I Approach Clients About Subcontracting Their Work Out to Someone Else?

Dear Danielle: 

My business is at the point where I’d like to outsource some of the tasks I’m doing for my clients to another Administrative Consultant so I have more time to focus on creating information products and other leveraged income projects. Any tips on how to approach my clients so they feel comfortable with the switch? I would make it seamless for them, and continue to be their contact. And any tips for selecting the right admin consultant would also be very much appreciated. Thanks!Deidra Miller, Magic Wing Administration

Why make the switch in the first place? My feeling is if you want to keep the business, never abdicate the relationship.

That one-on-one relationship and the shared body of intimate knowledge and understanding of the client and his/her business that grows from that is, after all, one the the most important ingredients that create value and allow you to achieve the results you do for clients—and why you get paid the big bucks.

That’s not something that can be delegated. And it’s not something you want to delegate if you want to keep the integrity of that value intact.

No one needs a middle man. As a client, I’d be thinking, “If you’re just passing me off to someone else, what do I need you for? Why am I paying you the big bucks instead of just working directly with the person who is actually responsible for the relationship?”

If you want to keep the client, my best advice is to partner (not subcontract) with an Administrative Consultant in the same way that clients retain you.

The dynamic of an ongoing collaborative relationship like that is a lot different than if you were to pass the client off to someone one.

In that kind of context, the relationship with your client can be seamless and continue just as it was before because the Administrative Consultant you partner with is supporting you, not the client.

You’re still the one who has the relationship and direct communication with your clients and the one who directs whatever work is involved. Clients don’t need to know who all supports you in your business so there’s no need to approach them about anything.

If you really do need to pass the client off to someone else, if you simply are unable to maintain that direct relationship, in my book, it’s best to give that business cleanly to someone else. It’s just better for everyone involved, particularly the client.

I created all my info products while maintaing my own practice. Granted, I did have to cut down my roster, but only because I hadn’t found the right Administrative Consultant to fully support me at the time.

Still, I don’t think it’s an either/or proposition. You can maintain your practice without sacrificing the level and quality of the relationship that your clients currently enjoy with you while creating your info products methodically over time.

In my guide to creating info products and passive income streams, besides partnering with an Administrative Consultant, one of my strategies is to focus on one product per month and then reserve time for that product creation on your calendar, either a few hours a day or one day a week.

Thanks for the question! I hope this helps, and if you want to continue the dialogue to gain more clarity about what I’m proposing, feel free to post in the comment. 🙂

Definition of Subcontracting

It’s important that people in business understand and use the term “subcontracting” correctly.

When you hire someone to help you in your business, that is not subcontracting. That is “contracting.” You are contracting someone to support you.

Subcontracting is when you outsource your client work (the work your client hired you to do as their contractor) to another business (i.e., an outside, third party). You are “subbing” that work. Hence the term SUB-contracting.

What You Need to Know About Subcontractors

I see so much confusion and ignorance about subcontractors in our industry. I say “ignorance” because so many aren’t so much confused as they are completely uneducated or misinformed about what a subcontractor is and how you work with one.

The very first thing to understand is that subcontractors are not part of your team.

There are legal implications to saying someone is part of your team. And the fact is, no one is legally part of your team unless they are an actual employee.

So what is a subcontractor?

A subcontractor is no different from you–an independent business. When you hire a subcontractor, you are a client to them, just like any of their other clients. They are not part of your staff. They don’t “report” to you. You don’t manage them. You don’t supervise them. You don’t “train” them. You don’t get to dictate their schedule or how they do the work in any way. There is no special “employee I don’t pay taxes on” privilege here. This is the law, plain and simple.

It’s only called subcontracting because they are doing work on behalf of your company. That is, you have outsourced (subbed) your own company’s service (the thing you are in business to do for clients) to another company. It’s sort of like ghost-writing. They are doing something for you as if they were you. They don’t get credit for the work because it gets delivered to your client as if it were your work.

It’s also typical that they accept the work at a reduced rate because the clients are yours, not theirs, and you need to maintain some kind of profit margin.

There’s a place for subcontracting. Just not in the way that many are doing it in our industry.

First, many are flat out violating the law. You do not get to work with what amounts to an employee, but pay them as an independant contractor. And if you are operating what you term a “virtual staffing agency” or similar, you are running nothing more than a temp agency, just like any other. And unless those “staffing” people you are hiring out are your employees, you are violating the law.

Second, even when using subcontractors correctly, you make it far more difficult to command professional fees and earn well because you have commoditized the work and devalued the relationship. When you do that, it lowers the perceived value in clients’ minds and they are less willing to pay well.

If you must use subcontractors (and like I say, there’s a time and place for them in any business), here is my advice:

  1. If your business model is one where you are merely farming work out to other companies (i.e., subcontractors), that’s certainly a viable business model. But it’s not one of administrative partnering. It’s the low-quality, assembly-line, McDonald’s of service models. Get clear about that.
  2. To be in compliance with the law, do not call subcontractors part of your team because they are not. They don’t need to be on your website and they don’t need to be given credit for the work. Anyone who subcontracts for you needs to understand that as well. Subcontracting is generally just a means for people to supplement income and revenue streams in their business. If they want to be recognized and get credit for the work, they need to get their own clients. 😉
  3. Never outsource your core competencies. You can’t outsource a relationship and this is the very core of administrative partnering. It’s part of what makes it so valuable and why clients are willing to pay more for it. You can’t build with a client the kind of shared body of knowledge, intimacy, intuition and understanding of a client’s business if all the work is spread out over many subcontractors.
  4. Rather than turn into a McDonald’s subcontractor farm, and being forced into becoming a people manager and volume-driven, assembly-line style business (what Seth Godin refers to as “racing to the bottom”), partner with your own Administrative Consultant. Just one client can pay for the investment, and it opens all kinds of income and freedom possibilities for you. When you get support for yourself in your business just like your clients are getting support from you, you create more “space” in your business, more time to work on your business, you can take on more clients if that’s what you want to do or just have more time away from the business. All without the issues of reduced profit margins, multiplied and complicated administration, and need for volume of clients that a subcontractor farm comes with.
  5. Set everyone straight who comes to you wanting to “add you to our virtual work team.” Whether that’s a colleague who wants you to subcontract or a potential client, that kind of language is your first clue that they don’t understand the nature of the relationship and what they’re really looking for is an “employee they don’t pay taxes on.” If they are to be salvageable, you’ve got to have a frank discussion with them about the fact that while you might be very happy to work with them, you are not part of their team, you are an independant business just like their attorney, their accountant, their web designer, etc. This is really important because of the legal ramifications of clients talking about you as if you were part of their company, and it is both irresponsible and unethical to let them continue to believe or understand otherwise.

Are Virtual Assistants Employees or Independent Contractors?

That’s the topic of a recent article on the USA Tax Aid blog here: Are Virtual Assistants Employees or Independent Contractors?

It reinforces something I’ve been telling folks all along about those team/multi VA businesses: ICs are not legally part of your team/business and they shouldn’t be listed as such on your website.

What they don’t seem to be able to grasp is that there are legal implications in portraying someone as part of your team.

Someone is not part of your team unless they are an actual employee and if you insist on calling them that, you are going to put yourself smack dab on the radar of the IRS.

Which is why the “team/multi VA” term is so idiotic.

If all they are doing is farming out their work and clients to other companies, there is already a (proper) term for that. It’s called subcontracting.

And those people, in order to be considered independent contractors running their own businesses, are not part of their team.

Regardless of your position on subbing out your client work/relationships, the fact is that sub is not legally part of your team. You don’t get to tell them when/where/how and you certainly don’t get to dictate hours and pay. And if you do, then you are going to quickly find yourself owing money and facing a great deal of hassle that could bankrupt your business.

Subcontractors do not need to be and shouldn’t be on your website.

It’s not about depriving them of “credit.” If they take on a subcontracting job, they don’t get credit. They are doing the work on behalf of your company. It’s your company whose name goes on the work. That’s just how subcontracting works.

You don’t have to like it. But if you want to argue about it, take it up with your tax authority. I think you’ll be set straight real quick. ;)

This is also another reason why you (or any business owner) should NOT submit resumes and references:  because you then give the wrong appearance that you are an employee applying for a job/position.

That’s NOT how business owners market.

Not talking about this and getting the story straight is as stupid, irresponsible and unethical as telling people they don’t have to pay their taxes.

Pay What You Owe

I’ve recently heard from several colleagues who have been having trouble getting paid from the colleagues who engaged them. I hear from folks like this all throughout the year, but even more so recently for some reason.

Seems to be an epidemic going on. They’re frustrated, not sure what to do and wondered what I think about it. So here are my thoughts on the whole topic…

It’s bad enough when to get stiffed by clients. It’s adding insult to injury that they have to worry about this from their own colleagues.

I think it’s reprehensible and unethical to withhold payment from subcontractors because you are waiting for payment from YOUR client.

YOU engaged your subcontractors, not your client, so PAY THEM fair and square.

And if you don’t have the money, then maybe you shouldn’t be engaging them in the first place.

But subcontractors, you aren’t off the hook either…

Have colleagues who want to engage you sign YOUR contract, and YOU decide what rate you will accept. Just because you subcontract doesn’t mean you have no say-so about how and when and what you get paid—but these things need to be established upfront.

That said, you don’t have any business talking about money or accepting work directly from clients that belong to the colleague you are engaged with.

If you’re going to be ethical about this, then you need to inform any clients who approach you in this manner that they need to go through the proper channels and talk directly with the person whose client they are—and that’s not you. Those clients are not your clients; they belong to the person you are subcontracting for.

This is yet another reason why that whole “team VA’ term is so ridiculously idiotic. Unless you are an actual employee, you are not part of anyone else’s “team.” So stupid.

Never include in your contracts, or sign any contract that has this, any clause that says you don’t get paid until the client pays the colleague you are subbing for. If you do, then you’re stuck waiting or not getting paid if their client doesn’t pay on time or at all.

And if you do sign a contract like that, don’t complain when you don’t get paid. You’re the one who signed it.

From a business standpoint, this is yet another example of why YOU have to be smart in your OWN business.

I get that some folks think this is the experience they need to gain confidence to go out on their own, and sometimes you gotta do what you gotta do to help keep some money flowing in. But never lose sight of the fact that when you are working for others (i.e., subcontracting), you’re building their business, not your own.

You’re paid less, you lose a great degree of control over your circumstances, and you waste time and energy that could be spent growing your own client base and long-term success.

My advice (if you’re still nervous about engaging directly with clients):

Stop with the subcontracting and instead look for colleagues who want to engage you as their own support partner in the same way that any other client would retain your ongoing support. You would charge them your full monthly fee just like any other client and you’re going to learn a lot more about the business, managing it, and what it is to provide ongoing administrative support than you ever will doing piecemeal, nickel and dime subcontracting projects.

Assembly Lines Are for Cars, Not People

Assembly Lines Are for Cars, Not People

I watched a documentary over the weekend called “Unforgotten: 25 Years After Willowbrook.” Willowbrook was a state institution on Staten Island in New York where mentally and physically handicapped children were warehoused up until 1987.

The conditions and abuses were deplorable, and an inexperienced local reporter by the name of Geraldo Rivera did an expose which ultimately (thankfully!) got the place shut down.

Geraldo Rivera went on to become one of our most well-known reporters and journalists in the U.S. He seems to be the butt of some jokes these days, but he said something in this documentary I thought was so wise. It struck me profoundly as it really correlates with what we Administrative Consultants do as administrative partners to our clients.

He said:

“You can’t treat humans like dogs in a kennel. There is no place to mass produce care, compassion and concern for people. It is impossible. It is fundamentally unsound. The assembly line works for cars. It does not work for people. People need humanity. They need the spirit of compassion. They need to be loved. They need to be able to fulfill their potential, whatever their potential is… however limited or infinite their potential might be. They need the opportunity to realize human potential.”

While he was talking about those poor souls at Willowbrook, to me it’s really a statement about humanity overall.

Business doesn’t need less humanity, it needs MORE of it, and as Administrative Consultants, that’s really the spirit we embody.

I was musing about all this due to a conversation we were having in our ACA community about subcontracting. There are many in our industry using subcontractors in an assembly line kind of way. They think, “Oh, I’ll just open a business and hire all these other people to do the work.”

They just don’t get it at all. You can’t outsource a relationship, and you can’t run an assembly-line style business that resembles anything like a true relationship.

I mean, hey, if that’s the business they want to run, that’s certainly their right and prerogative. There are all kinds of customers for everything in this world of ours.

But it in no way, shape or form resembles or is the same thing as a personal, one-on-one, ongoing partnering relationship of administrative support.

There’s a big difference between having employees and/or other independent professionals who support YOU in your business and merely farming out all the work to subcontractors in an impersonal, transactional, assembly-line basis.

A chasm of difference, in fact.

Never Outsource Your Core Competency

I’ve heard it commonly said that clients don’t care about this and don’t care about that. All they care is that their work gets done.

But the thing is, they do care. Very much.

They care when they are made to feel like a thing (and not a person) on an assembly line. They care when they have to deal with a constantly revolving door of workers they have only fleeting, impersonal contact with. They care when the right hand never seems to know what the left hand is doing. They care when they have to start over and begin at the beginning developing a shared knowledge base with every new person they have to deal with. They care that their work is passed off to people they never bargained for. They care that they are paying premium fees when that work is passed down to those (less skilled, less qualified, less creative, less thinking) underlings they don’t know, perhaps don’t like, and/or who don’t do as good a job as the person they thought they were hiring. They care that they don’t know who, what or where their work and information is being stored, viewed and passed around to.

Sometimes their dislike for this stuff isn’t even conscious. They just know on some level they aren’t happy with how things are being handled.

At some point, it’s up to you to understand what is important and why those things are important–even if clients don’t know or understand those things themselves. They aren’t going to know or understand all the subtle distinctions and nuances. And they don’t have to. That’s your job. Because those subtle distinctions and nuances can make all the difference in your service levels and delivery, your clients’ satisfaction, and ultimately, how they view and trust their relationship with you and how loyal they are to you.

One line I really love from Tony Hsieh’s (he’s the founder of Zappo’s) new book, Delivering Happiness, is this: Never outsource your core competency.

This reminds us that our work is our relationship with clients. Whatever the thing is that you are in business to do, whether that’s delivering shoes or providing administrative support, THAT is your core competency. Extraordinary service comes from extraordinary caring–about your clients and your craft. No third party will ever care nor be as passionate about your clients and delivering your core product or service to them as you.

Never abdicate your relationship with your clients.

Dear Danielle: Do You Subcontract Your Work to Others?

A prospective client recently contacted me and asked a good question. Here’s how I responded:

Dear Danielle:

If we work together, will you be outsourcing any of my work? Do you subcontract to other Administrative Consultants? —LA

Just as clients shouldn’t be doing everything themselves in their business, neither should Administrative Consultants. We are business owners/solopreneurs just as our clients are.

However, I know why you are asking.

There is a trend lately where a certain segment of people (often those with no experience or expertise themselves) starting businesses in our industry where all they are doing is farming the work out to third parties.

That is not administrative support. It’s an attempt to exploit an industry and mine it for whatever money they can get any way they can.

That is most definitely NOT what we as Administrative Consultants are in business to do.

There’s no personal one-on-one dynamic involved in working like that, which is precisely what defines ongoing administrative support: that deeply collaborative, personal relationship.

There are all kinds of pitfalls when working with a company that treats the work transactionally like that. I hear about them all the time from clients and from colleagues who are being farmed out or taking on subcontracted work.

The chief complaints I hear are that clients don’t like having their work sent out to people they don’t know. (If they wanted to hire someone else, they would have done that in the first place).

They frequently complain of problems with consistency in service and poor work quality in these arrangements as well.

And for the colleagues working for these companies, they simply don’t make much money and often have to deal with issues of late or non-payment.

It sounds like you have encountered your own negative experiences with that type of arrangement as well.

My business model is not one where I do the marketing and then spread out and rely on non-employees to do the work.

I am the craftsman in my business. When clients hire me, it’s my brain and my skills and my expertise they get.

That said, I do have my own small panel of long-time support administrators who help me in my business.

I have this help not only so that I can create the same kind of smooth-running business and life of freedom that clients are seeking to create themselves, but also, ultimately, because it allows me to provide my clients with vastly superior support and attention.

It does my neither me nor my clients any good whatsoever if I’m frazzled, overworked and spread too thin from trying to do everything all by myself.

But here’s the difference:

My relationship with clients is never outsourced.

When clients hire me, it’s me they work with directly.

Mainly, my panel of support help me with things related to the running of my business.

There are also some instances when I might delegate certain tasks or non-critical, non-confidential, non-sensitive parts of my work. However, my responsibility and control over the proper completion, quality and accuracy of the work is never abdicated or outsourced.

I don’t farm out or subcontract anything to any stable of third parties I may or may not know well (which is what happens in those subcontracting farms, often to other countries that are rife with identify thieves and credit card hackers).

I only work with my small, consistent, long-time support administrators who are colleagues I’ve known and worked with for many years.

In answer to your question, No (emphatically), I never subcontract your work. Your business, information and trust is too important to me to ever betray that.

What I do have is my own Administrative Consultant whom I monthly retainer for a body of support in the same way you retain me. Huge difference.

If there’s something additionally a client needs that is outside the scope of administrative support (e.g., they need a bookkeeper or a web designer, etc.), I can refer them or help them find the proper professional whom they can hire directly.

If a one-on-one partnering solution is what you are seeking, there is no place for a middleman in the equation.