Freelancers vs. Employees: Which is right for your business?
Richelle Stewart
The “Great Resignation” is far from over, and demand for flexible working conditions has popularized freelancing and contract work like never before. In 2021, reports showed as much as 20% of current employees in the U.S. (10 million people) were considering taking on freelance work.
Top talent around the world are increasingly finding that they can unlock their ideal lifestyle through freelance or contract work. In fact, the more talented and specialized the individual, the more likely they are to achieve success as a freelancer.
This begs the question: should your business be hiring freelancers or full-time employees?
Let’s explore the distinctions between freelancers and employees, the pros and cons of hiring each, and when it is appropriate to opt for one over the other.
What is the difference between a freelancer and employee?
Freelancer:
A freelancer is a self-employed individual who offers their services on a project or task basis to various clients. Freelancers typically possess specialized skills or expertise in a particular field, allowing them to offer specific services such as graphic design, writing, programming, marketing, or consulting.
Unlike traditional employees, freelancers work independently and are not bound by long-term commitments to a specific employer.
Employee:
An employee is an individual who is hired by a company or organization to work on a regular basis in exchange for a salary or wages. Unlike freelancers, employees have a formal and ongoing relationship with their employer, typically working under a contract or agreement.
Employees are integrated into the company's structure and follow the policies, procedures, and work schedules set by the employer.
Pros & Cons of Hiring a Freelancer:
Pros:
Flexibility
Freelancers are hired on a per project or contract basis, meaning the commitment is what you set it as. t. This flexibility allows you to hire a highly-specialized freelancer only when you most need them.
Specialized Skills
Freelancers often possess niche expertise in a particular field, making them valuable assets for specific projects. Their specialized skills can bring fresh perspectives and innovative solutions to the table.
Save on Labour
Freelancers are responsible for their own taxes, insurance, and equipment. On top of that, by hiring freelancers on a per projector contract basis you eliminate the need for a full-time salary.
Autonomy
Experienced freelancers will have defined processes and strategies in place to complete their projects, which alleviates the need for constant supervision and guidance. With the right onboarding process and well-defined project goals, freelancers can be left to their own devices while still delivering on your expectations.
Cons:
Lack of Commitment
Freelancers are not bound by a long-term commitment to your business. (Unless of course you want it to be!) While this flexibility can be an advantage, it also means that freelancers may not be as deeply rooted in your company's long-term goals. If you find a freelancer, you love working with, I suggest getting them on a retainer - this will ensure that they are motivated and can work towards your goals as well.
Limited Availability
Since freelancers often work with multiple clients simultaneously, their availability may be limited. This can pose challenges in situations that require immediate or ongoing support. Once again, be sure to lock in a contract if you find someone you love working with.
Limited Control
When working with freelancers, your business may have less control over the workflow and processes. Freelancers operate independently and may have their own preferred methods of working, which may differ from your company's requirements.
Pros & Cons of Hiring Employees
Pros:
Investment in Growth of Company
Employees tend to be committed to the long-term success of your business. They are invested in its growth and can become valuable long-term assets, contributing to its stability and continuity.
Full-time Availability
Hiring employees means having dedicated individuals who are available on a full-time basis at hours you set for them.This ensures support and availability for various tasks and projects when you need them.
Quicker Time to Integrate
Employees work closely with your business and its team members on a consistent basis leading oftentimes to a quicker integration within the company culture.
Cons:
Higher Costs:
Bringing employees on board comes with additional costs. These include not only their salaries but also benefits, insurance, and payroll taxes. Particularly for small businesses or startups with limited resources, these expenses can be significant and impact your financial bottom line.
Limited Specialization:
While employees may possess a broad skill set, their expertise might not be as specialized as that of freelancers. This limitation can affect the quality or efficiency of certain tasks or projects that require highly specialized knowledge or abilities.
Administrative Burden:
Managing employees involves administrative tasks such as payroll processing, performance reviews, and human resources responsibilities. These additional obligations require time and resources, diverting your attention from other aspects of your business.
Is Hiring a Freelancer Right for Your Business?
Freelancers offer flexibility, specialized skills, and cost-effectiveness for short-term projects, cost-constrained situations, or when niche expertise is required.
However, if full time availability, investment to the company and quicker time to integrate is more important to you - then hiring a FT employee might be the way to go.
It's important to carefully assess your specific needs, project requirements, and budget constraints to make an informed decision.
But if you are ready to do more with less…that’s where myself and Contra come into play. My priority is to connect your business with the best talent, with a focus on delivering results while decreasing project costs and time commitments.
Connect with me today to build a talented and agile team that propels your business towards success!
Sources: https://www.upwork.com/resources/why-companies-hire-freelancers#:~:text=Traditional%20full%2Dtime%20employees%20are,many%20of%20these%20overhead%20costs.https://www.usemultiplier.com/blog/freelancer-vs-employeeshttps://hbr.org/2023/01/9-trends-that-will-shape-work-in-2023-and-beyondhttps://www.gartner.com/en/newsroom/04-28-2022-gartner-says-us-total-annual-employee-turnover-will-likely-jump-by-nearly-twenty-percent-from-the-prepandemic-annual-average
https://www.upwork.com/research/the-great-resignation
https://www.fiverr.com/news/fiverr-business-hibob-research-2021
