The truth, much like many small business questions, is that the answer to this question is “it depends”. Not because it is the safe answer, but because it is the most appropriate one.
A lot of small businesses vary in how they function; operations, growth, comfort level with a non-employee resource such as a freelancer (an important factor), etc. Below you fill find an outline, including a neat graphic, on the difference between hiring employees or freelancers.
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Usually the choice among small businesses, employees provide a reliable option on a daily basis. The huge benefit here is that small businesses rely on personal service from all of their employees to all customers. Having someone who truly spends time working on projects and dealing with customers can help build long-lasting relationships internally and externally.
When to Consider an Employee:
- a role which is important to the long-term health of the business (finance, customer service, etc.)
- demands high understanding of product/service/technology of company
- looking to build cohesive team
- get familiar and personal with business, which helps in understanding day-to-day activities
- can cover other roles when colleagues are on vacation, sick, etc.
- potential to build a close-knit team for improved chemistry
- can be quiet costly: time, training, salary (depending on experience/role), benefits, etc. (this is from an operational point of view for small business – employees should always be provided with adequate training & benefits!)
- potential of leaving (after all the investment into their development)
Great option for small businesses on a tight budget and timeline. Freelancers usually come experienced and require little training. This allows them to jump into projects and help accelerate (and improve) the process. The biggest benefit here is the flexibility option for employers: freelancers get paid on a per-project or per-minute rate, eliminating the need to pay them when work slows down.
When to Consider a Freelancer:
- time sensitive projects
- high expertise (such as specialized web coding)
- work overload for current team
- majority of freelancers can do work remotely (depending on nature of work)
- cost effective option (once project is complete, they are no longer part of the payroll)
- no need for extensive training or development
- no team chemistry, and no direct “management” of work if done remotely
- projects can sometimes be late if freelancer is taken up with a lot of clients simultaneously
- lack of familiarity with business
Clearly each of these benefits/cons can go either way depending on the type of small business is in question: some owners/managers may be very comfortable with outsourcing work, while others prefer to keep everything in house. Some freelancers may be very costly (high expertise) compared to hiring an employee who can be trained to do the same, etc.
What would be the ideal situation?
Where small businesses have the exact right amount of employees and utilize freelancers when necessary. However, we all know that is not usually the case. Hopefully the above breakdown will help you make the right decision when the opportunity comes along.