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How to Choose the Right Service Providers for Your Startup

Whether to hire a service provider is a tricky question for many entrepreneurs. Startups are expected to run lean and be scrappy, mostly due to limited resources. Consequently, there’s a distinctive DIY mentality to startup culture, and in a lot of cases, it breeds extraordinary results.

But not all the time. Frankly, sometimes you don’t have the expertise, time, or capital for a DIY approach to make sense. If you’re on the fence about whether it’s time to bring in outside help, ask yourself:

  • What do you want to accomplish?
  • Do you or a team member have the expertise to accomplish that goal?
  • Do you or a team member have the time to accomplish it?
  • Can you afford help?
  • Can you afford not getting help?

How Do You Choose the Right Partnerships?

If you used that framework and arrived at the conclusion that you need help, then it’s time to begin the search for your next partner. Choosing the right one for you involves a number of different elements, and depending on the scope and importance of the need being filled, more or less work.

However, at the very beginning, you should make sure to evaluate multiple providers. Even if you have preexisting relationships, it never hurts to see what your options are. During this process, think about four core measures of good partners and use them to make the right choice.

1. Cultural Alignment and Mutual Understanding

The most important part of a good service provider relationship is cultural alignment. In many cases, you’ll be working together for an extended period of time on matters of critical importance. From day one, you have to speak the same language and understand what you both need from one another to achieve mutual success.

Even at the very beginning, providers should be able to articulately explain what you do and why it matters so they can apply it to your collaboration. If you notice a struggle here, or that their view of your organization does not match yours, you should pause to evaluate the relationship.

On the flipside, you should be able to give them the information to address your needs. To do this effectively, you have to know what you want and what you’re working towards. If you don’t, you can’t expect mutual understanding. It works both ways.

2. Experience Level

No matter the situation, the partner you bring on to serve a need in a critical area for your company – whether its recruiting, IT Services, accounting or otherwise – must have a nuanced understanding of that area through hands-on experience. The partnership is valuable because you have a need that they are specifically qualified to fill. Consequently, you have to evaluate the provider’s experience level.

What does that evaluation actually entail?

For one, you should come away from your interactions feeling like you are more knowledgeable on the subject than before. You absolutely don’t have to become an expert, but a good provider will give you the tools you need to have a clear perspective and elucidate key points you hadn’t thought to consider before.

You should also see that they’ve worked on cases like yours before, whether with analogous companies or in similar situations, and achieved successful results. One way to gauge experience is to ask about how they would handle your situation, and how they have handled related ones in the past. Another is to look closely at who you will be working with on a regular basis and see how skillfully those team members can answer your questions now.

3. Reputation and Referrals

You can’t see into the future. You can take an objective look at the past and present to make an informed prediction. This where a potential service provider’s reputation and referral network comes into play. While you may be unfamiliar with the space in which prospective partners might play, it’s more than likely you know people who have interacted with them before.

Ask around. Share that you’re meeting with a select group of providers to serve a particular need with a handful of people you think may know them or the space. See how they respond. Is a given firm’s reputation strong? Do people applaud them for taking a customized approach or being generous with their time? Or do they mention a propensity for lateness or less-than-commendable deliverables?

Next, reach out to referral networks. Select companies the provider lists as referrals, along with clients they don’t. What do they have to say? Do they recommend you form the partnership? If not, that’s a serious red flag, unless some other compelling extenuating circumstance came up at the same time.

4. Transparency

Transparency in a partnership is absolutely critical. From the outset, the answers to the following questions should either already be crystal clear or relatively easy to get to after collaboration together:

  • How much do they charge and what is their pricing structure?
  • Who is actually completing the projects? Is this the person you talk to day-to-day or someone else?
  • When are they available, and how much time will they spend on your company?

These aren’t the only questions that should come up in conversations, though. For one, really strong partners will tell you what you do and don’t need, even if that means not using their services yet or ever. Remember, just as you are evaluating them, they should be evaluating you.

Always Take a Strategic Approach to Partnerships

Every company has a different balance of team members with unique skills, and sometimes outside help is necessary in one critical area but not another. Plus, building partnerships takes time. Your goal should always be to be strategic in your decisions. Weigh the pros and cons of bringing someone in, but only after definitively identifying your desired outcome. Then, if and when you need specific providers, take this guide and use it to enhance your decision-making process.

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