We're in the middle of the age of the gig economy. There are more freelancers and independent contractors than ever before, thanks in part to the availability of short-term gigs from businesses and the rise of new technologies that enable remote work. As a result, many new entrepreneurs have jumped at the chance to delegate tasks and build a pseudo-workforce using these inexpensive, short-term alternative employees.
But if your business is growing quickly and you're in need of more help, is an independent contractor going to be enough to serve your needs, or should you hire someone on full-time? Hiring full-time vs. contracting out is a choice that deserves careful consideration.
Advantages of Independent Contractors
Let's look at some of the advantages of independent contractors:
- Roughly 15. 8 percent of the American workforce is currently employed in "alternative work," or the gigs that keep the gig economy running. There's no shortage of willing, able people in the freelance market who would be willing to work for your business, nor are they difficult to find (since they often market themselves).
- Hiring contractors gives you more flexibility when it comes to workforce allocation. If you only need a contractor for a few months, you don't have to hire them for longer than that period. If you want to seek an alternate provider, you don't have to go through the mess of firing them formally.
- In general, independent contractors cost less to hire than full-time staff members. You'll only need to pay them for the work they actually do for your business, and their hourly rate often comes in lower than those of their full-time counterparts. On top of that, you won't need to worry about tax and benefit payments, which can add another 25 to 40 percent of the employee's base salary. Even hour for hour, independent contractors are far less expensive.
- Though independent contractors still have some legal protection, you aren't as liable or legally vulnerable when you hire one. Full-time employees on your premises may sue you for personal injuries they sustain on the job, discrimination, and other legal hiccups.
Advantages of Full-Time Hires
On the other hand, there are some advantages to hiring someone full-time as well:
- Your full-time hires may still quit, but they'll generally be more reliable than your independent contractors. They're seeking full-time work because they want something stable, and they'll be available 40 hours a week to do whatever you need help with.
- Hiring employees full-time is a perfect way to start a professional relationship. Your employee will learn new things and advance their skills as they work with you, and you'll learn more about their work style, strengths, and weaknesses as the years roll on. This is an extra value that your independent contractors probably won't be able to add.
- Having full-time employees is something of a status symbol; people may form a first impression of your company by how many employees it has, and walking into a meeting with an employee by your side sends a powerful image about your company's strength. It's also helpful to have backup during particularly intense meetings or important networking events.
Decision Factors
There are pros and cons to each side, so how should you decide which option is best for you? It all boils down to these important factors:
- How much money do you have to spend? How much reliable revenue are you earning? The more money you have to spend, the more feasible a full-time employee becomes. The tighter your budget, the more you should lean toward contractors.
- Judging when to hire your first employee can be tough, since you won't be sure how the role will evolve, or how your needs might evolve in the near future. If you're still uncertain about how things will change, or if you're early on in your business's growth, independent contractors are better.
- Personal preference. Most people naturally prefer to work with one type of worker over another. Your personal preferences can affect your professional relationships, productivity, and satisfaction, so don't be afraid to consider them (even though this should be a mostly objective decision).
The Answer To Hiring Full-Time vs. Contracting is . . .
There's no right answer when it comes to this decision. All you can do is look at the pros and cons with an objective mind, consider the variables affecting your outcomes, and go with the decision you feel is right. You can always change your mind later if it doesn't work out as anticipated.
