Simple guide to work with an outsourced company to build a new product

I have helped companies from one person startups to Fortune 500 companies build new products, by helping them shape their idea into a real-world, usable product that's sellable. Here's everything I learnt over the past 7 years doing just this.

While an idea striking you like a lightning bolt is one thing, turning that idea into a real product is another mammoth task of its own. For the sake of this conversation, I’m going to restrict myself to talk about the software products, and not hardware.

If you are a marketing or sales first founder of an idea, building a software product becomes even harder for you. You need to work a tad bit extra to do some of the following:

• Find a tech first co-founder (which is always super hard)
• Find good talent who can decide on what’s right for your idea
• Risk investing money that could go down the drain if something goes wrong

The upside if you solve these issues is that you have an idea that has solved a critical problem using the product you built with your co-founder, tech and right amount of investment. This is where the famous “Only 1% startups survive after one year scenario”. And the fact of the matter is, you can be in that 1%. All that you need to do is to make some critical business decisions. Let me tell you how.

Step 1: Find an third-party technology firm (preferably small)

Before we jump into any conclusion, remember that most of the small firms are hungry to get long-term customers who “they can trust” to match their payroll. This is a huge gain for you. Work with small firms.

Here are some evaluation criteria for finding the right firm for your idea to build a product:

• Check their reviews online (Clutch.co is the best place to start)
• Talk to a firm who has good social presence (this kind of holds them liable, since they need to maintain their ‘good image’ to gain new customers. Chances are thin in them cheating or running away)
• Have a conversation with them to see how human they are. If you are talking to founders, even better. These people are keen in helping ideas grow.
• Follow your gut, not others' opinions.

Once you finalize a firm (or sometimes to be safe, work with two firms), work with them on a very small assignment. Follow Step 2.

Step 2: Do a micro-POC or a PDW

Let me take a few seconds to define what these jargons are:

Micro-POC: This is something we strongly suggest our clients do first. This is a prototype that they build in tools like Figma after hearing your idea. This helps you measure how deep their thinking is, and how well the firm is invested in adding value to you.

PDW: This is a typical three-day activity called Product Discovery Workshop. Skcript has been incredibly successful in running these, where you invest a couple of days to create something that you can visibly see, get acquainted with the firm and gauge how well their thinking is about your idea.

Now, let me come to the most important part here. The cost. I know how hard it is to invest your savings in an idea in a firm who you knew nothing about a few days ago. This is scary, and I feel you. That’s one of the reasons why I suggest you invest a couple of thousand dollars in the Micro-POC or PDW.

If you are a single-person startup, it should typically cost you like $3000 for these activities.

I strongly suggest you to learn more about the Product Discovery Workshop here. This is a huge upside you have to gain the following:

• You get a prototype design
• You get to know the team who you would be ‘investing your money’ in to build your product
• You get a sense of how heavy your idea is, letting you decide whether you can build this product bootstrapped or you need an investment

The upsides are high. Trust the process.

Step 3: Evaluating a firm based on portfolio

A ton of companies you ‘think’ have a really good portfolio, fail to implement the idea you have. Ultimately, work with a company who can build your idea, not trust them that they would build your idea the same way they built others' idea. There is a world of difference here.

The simple and effective way for you to evaluate an outsourced consulting firm is to talk to them directly, and ask them to build something really quick for a few hundred/thousand dollars. It is simple, effective and just works without wasting your time. Above all, your certainty of building a great product is very high.

Step 4: Work on milestone based payments or fixed price

Trust me, Upwork, Freelancer.com and so many other websites make it super attractive for you to trust their pay-per-hour model. But remember that when you fall for it, you just bought into their business model.

In software, it is super easy to drag something to increase your billing hours and they get what they want. Instead, work with a company who works with you on a fixed-bid product development model. This keeps your cost predictable, the scope unchanged and above all, it balances the pressure equally on the firm and you to deliver and pay on-time.

This model works really straightforward. If the firm delivered the features that they promised according to the timeline they proposed, you pay them.

But remember, you need to be available to those people all the time. Your delay is not their delay.

Step 5: Work on actionable sprints

Sprints are crucial. It is not just for the large corporations, but also new product development as well. Work with a firm who propose actionable sprints that can work based on results.

This holds them accountable and above all, it is important to remember that you can expect to roll out your product to your customers at a time that you can predict.

While there are so many uncertainties that you need to manage while building a product, working with an outsourced company reduces the uncertainty a bit more, helping you focus on what needs to be done to grow the product outside of the actual development.

If you still have some questions about this, write to me by clicking here or book a free consulting hour with my team here.

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