The “gig economy” that took hold after the Great Recession is still going strong, but according to a recent poll conducted by Manta, most small business owners aren't taking part in the trend. The majority of the more than 2,200 small businesses in the survey report they prefer to hire permanent, salaried employees. Only 36 percent currently use contract workers;15 percent of business owners polled expect to hire independent contractors or freelancers this year; only 26 percent have ever used online marketplaces such as Upwork to find and hire independent contractors.
If you're among the many small business owners who are reluctant to hire freelancers, are you missing out on opportunity, or dodging a bullet? I’d argue it's the former.
Here are some myths and realities about hiring independent contractors that you should understand.
Myth: You can’t control independent contractors.
Reality: You can’t micromanage independent contractors—that much is true. Telling an independent contractor exactly how to do his or her job would put you at risk of fines and penalties from the IRS. The agency has strict rules regarding how much control an employer can exercise over an independent contractor’s behavior. (Learn more about the difference between independent contractors and employees.) However, providing detailed explanations of what you want from the freelancer, combined with explicit contracts laying out your expectations, will help ensure you get the desired results from the independent contractor's work.
Myth: Managing independent contractors will take up too much of your time.
Reality: Independent contractors are skilled in their fields and often have decades of experience, which means they can typically hit the ground running. True, you will have to get them up to speed on your business culture and the specifics of each project, but you won’t have to train them from the ground up as you might with entry-level permanent employees.
Myth: Independent contractors are too expensive.
Reality: One of the biggest advantages of hiring independent contractors is you can find them at a wide range of price levels. Of course, the adage you get what you pay for is also true; if you're looking for specialized skills or lots of experience, you will have to pay accordingly. However, because independent contractors can laser-focus on your project without the distractions of the typical workplace, they’re likely to get things done more efficiently and effectively than many employees.
Myth: Your employees won't like working with independent contractors.
Reality: Incorporating independent contractors alongside employees is standard practice in many industries. In fact, your employees are likely to welcome freelancers who can take time-consuming tasks off their plates. (Wouldn’t you rather have a freelancer to help shoulder the workload than do the work of two people yourself?) Where problems arise is when employees feel you’re asking them to train a freelancer to ultimately take over their jobs. Smooth the relationship between your employees and your freelancers by letting employees know how much you value them. Put them in charge of managing freelancers—they will gain management skills and confidence, and maybe even learn a few new things from the freelancer.
Myth: Why should I bother working with an independent contractor? They’re just going to leave.
Reality: Finding the right independent contractor may take some time. But when you find a freelancer who understands and can deliver what you want, it’s often the beginning of a beautiful friendship. Many business owners work with the same independent contractors over and over again for years or even decades. In fact, building a “stable” of regular freelancers you can rely on can help your business through ups and downs. Maintaining good communication, setting clear expectations, and treating your independent contractors fairly will help build a lasting relationship that benefits your business in the long term.
Still not sure about independent contractors? Your SCORE mentor can help you find sources for hiring freelancers and provide guidance in how to get the most from the relationship.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.