Founder/CEO of Rankings.io, an SEO agency that helps elite personal injury law firms dominate first page rankings.
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When it comes to scaling your business, you have to leverage different resources to grow. Technology (such as software and artificial intelligence) is a crucial element of successful scaling, but today, let’s focus on an equally important factor: the people behind your product or solution.
The simple math is that when your business grows, you need more people. However, this doesn’t necessarily mean you have to hire full-time employees every hiring round. You can hire different types of help — full-time employees, subcontractors/freelancers, and outsourced companies — for specific tasks at various stages of your company’s growth. Naturally, there are pros and cons to each worker category that you should carefully weigh before deciding how to move forward.
Full-Time Employees
When you hire a full-time employee, one of the main benefits you gain is having a lot of say over what tasks they accomplish daily — as long as they accept those terms as part of their employment. For example, you can have them attend a virtual conference during the work day, go to three mandatory meetings a week and work on specific projects each quarter.
There are other benefits to hiring full-time workers as well. When full-time workers stay at your company throughout the years, they build specialized knowledge about your products or services. If they’re in client-facing roles, they have the opportunity to develop strong relationships with those clients over time. They’ll also become key parts of your company’s culture, carrying and sharing that institutional knowledge.
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However, full-time employees come with mandatory costs and other expenses that can add up. If you want your full-time employees to remain committed, you have to keep them happy. Poor employee retention can end up costing you both time and money. Just look at Gallup’s self-described “conservative estimate”: the “cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.”
To reduce employee turnover, you have to offer competitive salaries, benefits, training, tools and company perks (like a gym stipend); doing so can get expensive.
Subcontractors/Freelancers
If you decide to hire subcontractors/freelancers, you can avoid many of the cons of hiring full-time employees. They get hired to complete a specific project, so your expenses end at the completion of that project. You don’t have to pay them salaries or benefits, nor do you have to offer them company perks.
Another benefit is you have a medium-level of say over the tasks they work on but don’t have to hand-hold them. You get to say that you want, for example, a particular project finished in a particular manner by a certain date. You don’t have to provide a lot of oversight. When you hire a subcontractor/freelancer, you’re hiring a professional who knows their craft, be it content writing, social media strategy or app development… and if you end up not liking what they produce, you generally don’t have to work with them again.
But subcontractors/freelancers do come with some disadvantages. For one, they ultimately might end up not being the best fit for your company or a particular project. Additionally, if someone else hires them at a higher rate, they might decide that they don’t want to work with you long-term. Chances are that they’re also working with more than one client (perhaps even with your competitor), so they won’t be able to devote their whole focus to your project.
Outsourced Companies
Some people in the corporate world view outsourcing negatively, but the truth is that pretty much everyone outsources work in their daily lives. If you’ve ever gone to a restaurant and ordered, say, a turkey sandwich, guess what? That’s outsourcing. You could have made a turkey sandwich at home, but you decided to pay a company (the restaurant) to do it for you.
Similarly, when you hire a company to tackle one of your business goals, they’ll do so in their own way. The company’s team has a history of doing that type of work and will require the least amount of hand-holding out of the three types of workers, enabling you to remain focused on your company’s core tasks. Like freelancers/subcontractors, unless there’s a specific contract in place that states otherwise, you don’t have to work with the outsourced company again if you don’t like what they ultimately produce.
However, that low maintenance comes with a cost: low control. You can’t tell a company you’ve outsourced exactly how to build your widget or write your content step-by-step. You’ll have to accept that you just don’t have that authority over them. You might also encounter some difficulties with differing work styles and expectations. These challenges can be harder to overcome when dealing with different team members at various levels of an outsourced company versus dealing with an individual subcontractor/freelancer.
Remember To Follow All Laws
No matter how you approach your company’s hiring, be sure that you comply with all applicable labor laws. If you don’t, you can face severe consequences. For example, in the United States, the IRS can heavily penalize employers who misclassify employees as independent contractors.
Many businesses use a combination of full-time workers, subcontractors/freelancers and outsourced companies to accomplish their goals. One type of worker isn’t better than another (it depends on the needs of each unique situation) and just because one company hires a freelancer for a particular type of work doesn’t mean that seeking a freelancer is the right call for another company.
You can use a mix of these different types of workers as your company grows. For example, if you need to expand your company’s marketing department, you might decide to hire a full-time content writer and bring on a subcontractor/freelancer if you need additional help during a busy quarter. You might decide to outsource your company’s accounting to an accounting firm until you can afford (or see the need) to bring on a full-time accountant in-house.
As long as you stay on the right side of all applicable employment laws and treat all of your workers with care and respect, a strategic approach to hiring different types of workers will put your company in the best position to succeed.
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Author: Chris Dreyer, Forbes Councils Member
