If you’re like many small business owners, you started out as a “solopreneur”—a one-person bands who does it all. However, as your client lists and product or service offerings grow, there comes a point where you can’t do it alone.
Some signs that may indicate it’s time to expand your team include:
- Tasks are slipping through the cracks.
- You’re missing deadlines.
- You’re making silly mistakes.
- You’re finding it difficult to stay organized.
- Customers and vendors are getting frustrated because you don’t respond promptly.
- You’re working constantly and beginning to feel burnt out.
If any combination of the above sounds familiar, consider delegating some work. Whether you decide to add employees to your payroll or work with independent contractors, by making others a part of your team you’ll be able to focus on what you do best and ensure other responsibilities don’t go undone.
So, should you hire employees or outsource work to independent contractors? Both have their advantages and potential disadvantages.
Pros Of Hiring Employees
- Because they’re part of your business, they stand to gain a stronger understanding of your business’s internal processes, needs, and expectations than an independent contractor might have. Therefore, they will know how to do their work and understand how that work fits into the big picture.
- The hourly rate you pay them will probably be less than you would pay to a contractor.
- You have more control over the work. As an employer, you establish how you want tasks done, what technology and tools to use, office hours, etc.
- When your workload increases, you have someone who is readily available to assist. Your work is their priority; they aren’t dividing their working hours between you and other clients.
- If you need to step away for a day or go on a week-long vacation, you have someone you can rely on to keep the business operating while you’re gone.
Cons Of Hiring Employees
- In addition to wages, you may also be required to provide certain benefits to employees. That can add additional cost to your bottom line.
- You add the complexity of payroll to your business. Certain paperwork is legally required and you’ll need to withhold employees’ federal, state, and local taxes; social security; and Medicare from their paychecks.
- Even if your business experiences a drop in sales or profitability, you still need to pay your employees their wages and salaries.
- If you discover an employee isn’t a good match for your business, terminating that worker might not be a simple process.
Pros Of Hiring Independent Contractors
- You don’t have to commit to paying them regular wages or a salary, nor are you required to provide benefits. So, even though you’ll likely pay them more per hour than you would employees, they could save you money overall.
- If things aren’t working out with an independent contractor, you simply don’t have to work with them anymore (after any contractual obligations are met). You don’t have a termination process to adhere to as you would with an employee.
- It brings in someone with the specialized skills you need for a particular area of your business. That may mean little to no training necessary.
- They are responsible for their own permits and professional licenses.
Cons Of Hiring Independent Contractors
- You lose some control over the work. Independent contractors typically have the autonomy to work from where they want, use the tools and technology they want, and work the hours they want.
- Independent contractors often work remotely, so it may be difficult to know exactly how work is progressing.
- Because they serve multiple clients, independent contractors may not be able to meet your deadlines as quickly as you would like.
- Unless you have an agreement with an independent contractor that explicitly states it, you may not own the copyright for works that an independent contractor creates for you.
To make sure you make the right choice for your business, consider the type of work you need help with, the amount of work you need to delegate, whether the work is recurring or sporadic, how much control over the work process you’re comfortable with, and the legal and financial impact your choice will have on your business.
A SCORE mentor can serve as a valuable sounding board and source of insight as you begin working through all of that. Contact us today to schedule free counseling from our volunteer mentors who have knowledge and experience in all aspects of starting and running a small business.