When growing a business, a major consideration is whether to hire a freelancer or an employee. The decision depends on various factors, including the project’s requirements, workload, and available resources. Paying by the hour might be cheaper, depending on the number of hours worked, and freelancers may be more suitable for projects with acute specialist needs.
Freelancers can complete tasks quicker and with less guidance due to their specialized skills. They also work remotely, which can be beneficial for businesses with limited working space. Additionally, freelancers can be easily scaled up or down based on workload, making them a more flexible option.
Hiring Freelancers vs Employees: Key Differences
Hiring a freelancer can be quicker than hiring an employee, as it involves discussing fees and starting the project immediately. However, good-quality freelancers may need to be booked months in advance, and they may not always be available for tight deadlines. Without a contract, freelancers can leave a project midway, and their lack of familiarity with the business can lead to additional time spent learning systems and processes.
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Employees, on the other hand, tend to be more committed to the business and can grow with the company. They are more invested in the business’s long-term goals and are familiar with the company culture, other employees, and clients. Employees also provide easier cash flow forecasting, as their salaries and obligations are set. However, employees can be more expensive to hire, and recruitment can be time-consuming and costly.
A combination of full-time staff and freelancers can offer the balance needed between long-term and short-term goals. This approach provides a stable base with full-time employees and extra support from specialist freelancers as needed. Kay Phelps, founder and director of PR in HR, prefers hiring freelancers for her small business, citing their specialized skills and flexibility as key benefits.
Nishi Patel, managing director of N-accounting, has used both employees and freelancers in her business. She believes that employing people is often the better option for roles that are genuinely long-term and central to the business, as it provides loyalty and stability for both the employee and the employer.
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In terms of costs, hiring an employee can be more expensive, with £23.05 per hour based on a £44,950 per year salary, according to Reed. In contrast, freelancers can cost around £100 per hour, according to payrollprices.com.
For businesses that require a mix of long-term and short-term support, a combination of full-time staff and freelancers can provide the necessary balance. This approach allows businesses to maintain a stable base with full-time employees while also accessing specialist skills from freelancers as needed.
Long-term Value of Employees
This can lead to a more stable and experienced workforce, which can contribute to consistent profitability. A hematologist may prefer to hire employees for their long-term commitment to the business.