Have you ever had an idea that you just knew would work, but didn’t have the resources or the technical know-how to bring it to fruition? It’s a frustrating experience most young entrepreneurs face at least one point in their career. I hit that proverbial wall on my first business endeavor, which forced me to bootstrap design and development, but learning to work within my means actually expanded them.
I started my first online business while still in high school. It wasn’t an overnight success story and I didn’t sell it for millions, but I learned incredibly valuable lessons. The first website cost me about $150 to a friend and a few hours of frustration with WordPress. The second website wasn’t much better, costing approximately $200 worth of food and drinks to another friend, not to mention many more hours of frustration. Yikes!
Here’s the kicker, though: I’m a terrible designer and as soon as my web business began really growing, it became apparent that serious upgrades would be needed. But I was faced with the classic college entrepreneurs’ dilemma: very little money. I took my search online and started trolling sites like Freelancer & Odesk.
After hours of examining resumes and comparing reviews, I decided that it was worth a shot outsourcing technical work. I hired my first real outsourced team and crossed my fingers. Since that fateful day I’ve worked with a half dozen teams on everything from web apps to splash pages and even large-scale enterprise sites.
It’s been a fun journey, but one fraught with errors and costly mistakes. One $10,000 project that I was handling went completely belly up. The lessons I’ve learned will hopefully help you avoid the same mistakes.
Lets dive right in with some of the core lessons.
1. Deal with firms, not individuals.
Many young entrepreneurs I encounter naturally think that dealing with individuals is going to be cheaper then dealing with firms. This might be true, but the safety of dealing with a firm will absolutely outweigh the short-term price difference. If you’re collaborating with someone you already have a professional relationship with, then working with an individual can be great. But if you try working with someone 2,000 miles away, who’s to say that they’ll stay on your team? If they were even committed to actually helping you in the first place, that is.
Some people say well a professional firm could just easily scam you. Wrong. The companies that have built up their reputations over years of hard fought bids and hours on the clock are not going to just up and disappear. The project managers provide the valuable link that you need with whoever is actually doing your work. They are local and they are not going to let the project slip if you’ve chosen your company right. This isn’t to say that not every “business” is legit, though.
So how can you distinguish the real players from the fakers?
- Real Office Space – doesn’t matter if it’s in Bangalore or Manila. If they’re paying rent and have a physical address, that’s a good sign.
- Phone numbers that someone answers
- US based phone numbers
- Quantity and quality of “real” customer reviews – sites like Elancer are very hard to fake reviews since only actual customers can place them.
- Look for signs of this company in their local media.
- Is there team featured on their website? I like to see the offices and faces of the companies I’m working with. Does their site have stock photos or real pictures of people at work.
- Have they invested time and effort in proving who they are. A great example is this slide show. Raj is the founder and puts his name and face everywhere. By putting himself at the head of his company and putting his face into the world he’s putting a lot on the line. Messing up on a project would mean lasting consequences, especially online. I know, this company is legit, by the way, because I’ve worked on them.
Use these steps to narrow down the list of potential companies to work with. I strongly encourage setting up Skype meetings with potential business partners and truly getting to know them. After all, these people will become an extension of your own brand and reputation.
2. Don’t go opt for custom solutions – unless it makes sense for you, that is.
I recently took on a redesign project for a small Ecommerce company. The company had previously insisted on building a custom back end with overseas contractors. When I got my hands on the back end, I was shocked. There was absolutely no reason to have created a custom back end for what they needed. What they ended up with was a project doubled the size it should have been with only half the quality.
Companies specialize in these things for a reason and spending a few hours finding solutions will save you time and money – two things every young entrepreneur could use more of.
At one point, I was helping the company find new shipping software. We contacted our UPS rep and began a painstaking process of dealing with their software team to create a custom solution for our processing order flow. After hours of mind numbing meetings and painstakingly going over the details, UPS sent us their proposal: for $15,000 they could create custom software to integrate with our shopping carts.
The only problem? There were cheaper solutions online that I could have easily found with a click of a button. And guess what, ended up purchasing a product that offered the exact same thing (not to mention upgrades) for $89 a month. Thousands of dollars were saved on a custom product that would have been obsolete in just a few years.
Seriously – think twice before opting for custom solutions. Just because something is available for your company, it doesn’t mean that you need it.
3. Be overly detailed – and if a member of your team isn’t, be worried.
This mistake was the most costly mistake that I’ve made to date. I was handed a project to develop an enterprise level website for a local printer trying to expand into the internet printing industry. In preparing my research, the customer was quoted between $20,000 and $35,000 from firms in my area.
I took the search online and hooked up with a team that I had worked with on an earlier and much smaller project. We Skyped several times, exchanged ideas, and I thought they were ready and capable of handling the project. The proposed budget came to around $10,000 the client was thrilled at the cost savings.
The documents were signed and the project began I was confident in the team and the plan we had put together. However, I was both wrong and right.
The good news first: technically speaking, the team was very capable. They were also honest, and the projects failure had everything to do with communication (or the lack thereof). I spent hours researching and validating the team, but very little time validating the client.
The bad news: in a shocking turn of events, my US-based client was the one who failed to have his ducks in a row, and out of all parties involved, I was the one who failed to realize that. Talk about being blindsided…
The problems reared their ugly heads at the very start of the project. The client had very vague idea of what he wanted. I put together as much of a proposal as I could, but it was clear that he had not spent the time thinking through the scale and scope of his project. I let that slide and figured that I would simply “read” his mind and go above the call of duty. I took the risk and he was happy to oblige.
He was barely interested in the details and most of it went over his head. Unfortunately, is a common problem that happens any time that you deal with technical issues. The key point is that a client has to have a basic understanding of the objectives and be the one conveying them to you. You’re being paid because they need your expertise, not because you’re the one actually creating their business plan, unless that’s your specialty, of course.
The project jumpstarted without a hint of pricing data for its industry. We had a fully functioning website, but the business wasn’t there. There were no pricing options for printing products and checking out was a fiasco. We had a shell that was pretty, but pretty useless when it was unable to accurately quote customers based on real costs factors.
The problem was the client still had no idea and didn’t seem to care. For over a year the blank shell sat online as a pretty reminder to me that details up front are critical. And understanding the clients needs better then the client even understands them is key.
Jonathan Murrell is a graduate of Belmont University, where he studied in one of the most respected Entrepreneurship programs in the nation. He is a founder and partner at Candy Galaxy and J3B, LLC.
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