Full-time employees or freelancers - who are better for your start-up?

“I started my own digital service company 10 years ago. I was unable to decide whether I should hire freelancers or full-time employees,” said John, an entrepreneur. “I wanted to cut back on the payroll, not that I was broke. I was just trying to be more economical.”

“It can be challenging to decide which option will be suitable for your business because they both have some drawbacks. It is not surprising that many entrepreneurs fail to differentiate between full-time employees and freelancers,” he further added.

How freelancers can benefit you

The following are the benefits of hiring freelancers:

• It whittles down costs

Compared to the pay you offer to your full-time employees, freelancers will certainly be expensive – because they charge by the hour or by the project. But the overall cost is yet to be significantly lower.

• Freelancers will be working remotely, so you do not have to bear the office cost.
• You can avoid paying maintenance charges, energy bills and other associated costs for handling staff.
• You can save yourself from offering added benefits like social security, health insurance and pension contributions.

 At the outset when your business is in a growing stage, hiring freelancers will be a good choice.

• low risk

You will pay your freelancers for the projects done. Unlike full-time employees, you are not obliged to pay them when they have no project. You can terminate the contract if you are not comfortable with their deliverable. 

• The hiring method is very easy and smooth

“You can hire freelancers through various platforms like UpWork and Freelancer,” said John. “There are no geographical restrictions. So you can hire talented freelancers from across the globe. "You do not need to hire a specialist hiring manager for this role," said John. "You do not need to outsource it to an agency either."

Hiring freelancers is subject to some drawbacks as well.

• They cannot help you establish the company’s culture

Freelancers might work for you for a longer time, but they will not invest in your company's growth and success. They associate with you in an attempt to increase their earnings. When your business grows and you feel the need to hire full-time employees, you will have to begin from scratch. Your team of freelancers cannot be converted into full-time employees.

• Unavailability

Unavailability is the main concern among employers hiring freelancers. They work in different time zones, so it can be difficult for you to reach out to them when you want. Your full-time employees will report to you immediately. Hiring freelancers is not a good idea when you are to monitor the work and constantly discuss things related to projects.

• A lack of communication

A lack of effective communication can hinder the workflow of your company. Freelancers are not full-time employees, so you cannot reach out to them whenever you want. The completion of the project is often delayed because of modifications.

How full-time employees can benefit you

Here are the benefits of hiring full-time employees from you:

• It is cost-effective

Hiring full-time employees offers abstract benefits. Although they will cost you much more than freelancers in terms of benefits and office costs, they will pay you off in the long run.

• It ensures the establishment of a company’s culture.
• Your employees will remain motivated and productive. They will meet deadlines sooner.
• A happy workforce will help you achieve success.

An office space will be a huge cost. Thankfully, you can seek unsecured business funds in the UK. You will be able to cover the cost in a couple of years when your business starts generating profits.

• Loyalty

Full-time employees will likely stick with your company for a long period of time if you provide them with benefits and good pay. The retention rate goes up when you invest in their growth. It is crucial to acknowledge and appreciate their performance from time to time.

"By keeping your employees happy, you can motivate them to serve you for a longer period of time," said John. "On the contrary, freelancers are not bound to work for you. As soon as they get a new highly propitious project, they will abandon you."

Hiring full-time employees is also subject to some drawbacks.

• Creativity and productivity suffer

Full-time employees work 40 hours a week. Following a fixed routine every day can make them feel monotonous. They start quite quitting and it hampers the productivity of your business. To keep your business growing, you will need to keep your employees motivated and creative.

• Investment in employee training

You will have to invest in training programmes for your employees. It will add up your business cost. You can avoid bearing this cost by hiring freelancers. Nowadays, companies hire experienced and skilled people to save money on training programmes. It is also a useful way to keep the cost of your business down.

• Hiring is expensive and much complicated

First off, you will have to hire a hiring manager. You may need to hire multiple managers when the size of your company is big. The hiring manager will be responsible for conducting interviews and handling the payroll department. It can price you a bunch of money. 

You can think of outsourcing hiring because it may fit your budget. Unfortunately, both methods may take a longer time. It can take a long period to hire the best people for your company.

The final word

The hiring of full-time employees and freelancers is subject to both benefits and drawbacks. You will have to carefully analyse your business requirements before deciding the type of your workforce. Make sure you make a decision taking account of your future progress. Whether you choose freelancers or full-time employees, the cost is inevitable.

Figure out other ways to cut back on your operation overheads. Consult a financial expert who will guide you in ways to cut down on your overheads. You can also get some ideas from the internet research.