Do I Really Need "Employees" These Days?

As Founders, would we be better off just working with contractors versus taking on the burden of having staff? What are the pros and cons of creating staff these days?

September 23rd, 2019   |    By: Wil Schroter

Taking on full-time staff is a super scary proposition.

It's one thing to have to cut a check to a freelancer, but it's a whole other thing to know that someone's entire livelihood rests squarely on your shoulders.

Startup Founders have far more options and flexibility than we used to, which means the question of taking on full-time staff should be weighed much differently than it used.

Have Founders always been debating this question?

Not nearly as much as we have in the last decade.

The world of employment has undergone a massive change as the gig economy and freelance marketplace has exploded. Nowadays, more people are considering themselves "mercenaries" who can float between gigs which also means employers have to re-consider how they build their staff.

Back in the day, you pretty much just had to hire everyone.

What's the downside to just having contractors?

At its core, contractors are not your staff, so if your goals require you to have some sort of management control over their work, you're going to be severely limited.

In addition, there's always the notion that someone working on a freelance basis can simply decide to take another path at a moment's notice (which can often include a full-time job, leaving you without their services altogether).

Ultimately, there's a perception that working with freelancers has some serious loyalty and consistency challenges that having employees can help overcome. That is often exacerbated by the fact that while we love to be able to pay out contractors only when we work, those contractors don't love getting paid in a lumpy manner that's tough to forecast.

What's the best approach here?

Many Founders these days are only taking on employees where they absolutely have to (and where local employment laws require it) and sticking with freelancers as long as possible to help maintain cash flow consistency — which for a startup is critical.

The point is these days we have the option — and we should wield it to maximum effect.

In Case You Missed It

Employee vs Independent Contractor. In this guide, we’ll show you how to determine if workers are employees or independent contractors — and why you need to classify your workers at all.

The Value of Cultivating High Potential vs High-Performance Employees. Confusing a high potential with a high-performance employee is apt to lead to some poor promotion decisions down the road. And It also could deny a business the full benefit of having truly high-potential workers on its staff.

The Difference Between “Remote” and “Remote First” Companies. Thoughts on building a remote culture, from Paul Farnell — a remote CEO and Founder of Litmus.

About the Author

Wil Schroter

Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes BizplanClarity, Fundable, Launchrock, and Zirtual.  He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement).  After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do.  He's a seasoned expert at starting companies and a total amateur at everything else.

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