When you think about scaling a business, you might think it takes a lot of hard work, long hours, and hiring lots of employees. Indeed, business success often comes to those who put in the time and effort to build it, but in today’s uncertain economy, hiring anyone can represent a real risk.
For one, they’re expensive. When you hire someone in-house, there are several expenses associated with finding, hiring, and training them.
These include direct costs such as hiring a recruiting agency (if needed), as well as indirect costs, including time spent reviewing applications, interviewing candidates, and training new employees.
All told, this amounts to about $3,500 per employee—even ones with minimal salaries. And the cost to replace an employee is even higher, with one conservative estimate finding a $5,505 cost to replace an $8/hour employee.
Add in ongoing costs of payroll taxes and benefits, and hiring people in-house can get quite expensive. And the more expensive they are, the greater the risk—mainly if they don’t work out.
Today’s businesses, though, don’t necessarily need in-house talent to compete. The number of independent contractors making up the gig economy has grown considerably in recent years.
In the US alone, it’s estimated that there are more than 60 million gig economy workers, and it’s expected that contract workers will be the majority of the workforce by 2027. In fact, the economic fallout and mass employment that has resulted from the current pandemic will likely hasten the growth of gig workers.
Of course, freelancing is nothing new; there have been freelancers in almost all professional fields for decades (interesting side note: the term “freelance” dates back to the early 19th-century novel Ivanhoe, referring to mercenaries, i.e., freelances).
But the growth in high-speed internet globally, along with new business models for food and service delivery, has fueled the gig economy’s recent and rapid expansion.
Today, you can find a freelancer to do almost any function—including roles historically requiring a physical presence such as customer service and IT.
In fact, every essential function any business needs to perform—product development, marketing, accounting, etc.—can be achieved by freelancers. And typically at a significantly lower cost.
How much of a lower cost? Well, that will depend on the type of business, the level of expertise hired, and the freelancer’s rate. Keep in mind that, typically speaking, the more experienced the freelancer, the more expensive their rate will be.
Geography also plays a role where freelancers in developing countries are frequently less expensive than those in more developed economies (i.e., North America and Europe). Additionally, it’s important to remember that even if a freelancer’s rate is lower, it may take them more hours to complete a task.
What’s more, most freelancers will need user input and a certain degree of oversight, which might not have a hard cost associated with it, but might have a soft value in terms of your time.
The key is finding ways to a) vet freelancers and b) manage them effectively. That might mean spending time putting together briefs that clearly articulate a project’s goals, requirements, etc.
It also might require an investment in a task management platform to organize and track projects. If set up correctly to start, though, you can achieve significant cost savings by hiring a freelancer instead of an in-house employee.
And not only will you save money, but you’ll also save time, which can be devoted to tasks that are more central to building your business. And that’s the ultimate goal, isn’t it?
If you need help finding high-quality freelancers, check out the Thankz Team Management.