How To Get the Most Out of External Partners

Every business depends on external partners, consultants and agencies. But, unlike your own employees, you don't control their tools, systems and work product. Here's how the best leaders manage third-party contractors.

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By Tom Medema

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Whether for a few extra hands on deck for a particular project, a bit of advice on a critical decision or a need for specialized skills temporarily, most businesses will eventually reach a point where they need to call in reinforcements.

But simply hiring a top-notch consultant, agency or freelancer won't guarantee top-notch results. Unfortunately, there are many ways for that relationship to turn sour or fail to meet expectations, even among parties that enter the agreement with the best intentions. To avoid common mishaps and get the most out of engagements with external partners, it's essential to:

  1. Vet
  2. Set clear expectations
  3. Trust (but verify)
  4. Align incentives
  5. Document (or it didn't happen)

1. Vet

Before you can outsource work to an external partner, it's always worth exploring multiple options and finding the one that is most aligned with your needs. However, finding a partner with the necessary skills and resources to get the job done is just the first step. It's also worth exploring some of their past work when possible, especially those that share some common characteristics with the project you're considering them for.

It's also important to compare some of your key characteristics as a business against their past clients. For example, if you're an early-stage startup, you might find it challenging to work with an external partner that only has experience offering services to enterprise clients. Extra points can also be given to those with expertise in your industry or niche or who have worked on projects with similar characteristics.

Furthermore, while asking for references is worthwhile, you will likely get better intel from a past client they didn't hand-select. Instead, explore whether you have any mutual contacts or connections on social media platforms like LinkedIn or through industry groups. Look for other back-channel ways of getting an unbiased reference from former clients or colleagues.

Related: 6 Things to Consider Before Partnering Up

2. Set clear expectations

No matter how friendly or casual the engagement, getting formal with your expectations is always critical. Even an old college friend getting paid to look over your business plan for a few bucks on the side should clearly understand your expectations and vice-versa. That includes mutually agreed-upon pricing, timing, check-ins, deliverables and reviews. Most of all, however, it's important to align on expectations and reach a mutual agreement on how you'll measure success.

Related: 10 Questions to Ask Before Committing to a Business Partner

3. Trust (but verify)

Agreeing on a mutual definition of success and measurements of progress is key to building trust, but so is checking in at regular intervals to verify those expectations are being met. Ideally, you'll want to verify and review their progress regularly enough to catch early warning signs that things might be going astray, thus leaving yourself enough time to change directions or terminate the partnership entirely before it progresses too far.

Related: 6 Red Flags Warning Your Business Partner Will Drag You Down

4. Align incentives

External partners' livelihoods aren't as closely tied to the business's success as internal stakeholders. The reality is that it's their job to generate as much revenue as they can for themselves, which is why giving them a financial stake in your success is always beneficial.

For example, an external recruiter that's paid a percentage of a new hire's salary will focus more on quantity and salary than quality and value. Rather than incentivizing them to hire someone, it's important to incentivize them to hire the right someone. For example, you might want to consider a bonus structure that pays out based on how long the employee stays on with the company or consider offering stock options so that they are directly invested in your business's success.

Related: 5 Questions to Decide If You Need a Business Partner

5. Document (or it didn't happen)

It's essential to recognize that external partners likely aren't just providing their services to you. They might deal with multiple clients daily, and the more projects they juggle, the easier it becomes for things to slip through the cracks. That is why documentation is essential in maintaining high-trust relationships with external partners. Everything you think is important to the success of the engagement — including goals, milestones, deadlines, evaluation process, expectations, critical decisions and even the incentive structure, should be committed to writing in a mutually accessible location. Doing so will help minimize miscommunications and misunderstandings and keep everyone on the same page.

Tom Medema

Entrepreneur Leadership Network Contributor

CEO of Bubbles

Tom is the Founder of Bubbles, one of the fastest-growing remote work tools in tech— with a quarter of a million users. As a former CTO, he scaled his last company's remote engineering team from 1 to 150 in under two years. Those growing pains led to Bubbles, an async video collaboration platform.

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