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Time
to Expand?
Hiring Employees vs. Subcontractors
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Are
you ready to expand your business by hiring employees
or are you considering using subcontractors instead?
When you are ready
to expand your business and bring on extra help, there are
two main avenues used today: hiring employees directly
or using subcontractors.
Wearing too
many hats can be counter-productive, but sooner
or later you will be faced with the question of hiring additional
help. Before you decide what type of help is best for you,
let’s look at some advantages and disadvantages.
Some small
business owners use both employees and subcontractors in
varying proportions to handle the workload. The
choice is determined primarily by the nature of the work.
In-house personnel often perform urgent or specialized work
and keep the business running smoothly. Mass mailings and
large data entry jobs are more commonly outsourced.
The same is true for transcription and proofreading work,
which have generous deadlines.
Your needs
should dictate your decision. Whether you hire
subcontractors or employees, there are advantages and disadvantages
in each working relationship and each individual you hire.
Let’s look at
some of the advantages of working with a subcontractor first.
Subcontractors usually are hired on a project-to-project
basis and you only have to pay them for hours worked.
You have no overhead expenses with subcontractors because
they work for you on an as-needed basis, therefore you do
not have to worry about keeping them busy during slow times.
You also don’t have the added costs of payroll
taxes and workers compensation. Nor do you have
the responsibility and cost of additional office space and
equipment, because subcontractors generally work from their
own office, using their own equipment.
You will find that
you receive better loyalty, dependability and quality of
work from subcontractors. You see your work and your success
become very important to the subcontractors who are in business
for themselves. The relationship can even lead to
more referrals to your business.
The advantages of
working with employees are numerous. Having a dependable,
capable and knowledgeable person in your office on a daily
basis can be an asset. For some, just the benefit
of knowing the phone will not go unanswered is worth having
a full-time employee. Full-time employees also
are able to respond to projects that require same-day turnaround.
A major disadvantage
to working with subcontractors is availability; the subcontractor
may be busy working on another client’s projects at
a time when you need her. Working with a subcontractor often
is a no-commitment relationship because subcontractors cannot
be dedicated to only your work; otherwise they are not truly
subcontractors. However, subcontractors are flexible
and the type of relationship you are looking for in a subcontractor
can be established at the beginning of the relationship.
The major disadvantage
of hiring employees most often has to do with cash
flow. Payroll has to be paid on a timely basis,
whether your clients pay you on time or not. If you have
a service business, employees are the biggest cost. Payroll
is there whether you are busy or not. Full-time
employees also are able to waste a lot of time with breaks,
long lunches, personal calls and visiting.
Despite all the negatives,
both subcontractor and employee relationships with the right
people can be a great advantage for you and your business.
Be sure to research all the costs involved.
Make sure you test the skills of the people you want to
hire and check their references. Making wise hiring choices
from the beginning will be to your advantage and you may
even find that a combination of both will work best for
you.
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Odetta
Taylor is the owner of Alternate Office Solutions, an office support service
that has been in business for 9 years in the Triangle providing a variety
of administrative services to companies both large and small.
