Should Small Business Hire Contract Workers?

By Suba Sriram

As the career landscape has changed, with employees no longer staying with one company for the bulk of their career, corporations have been turning to contract workers on a larger scale. Many Millennial tech employees spend the first years of their career purely in contract jobs that may last months or years. For many, it has become a way of life. The practice has not taken off with small business to the same degree, but there are reasons a small business shouldn’t ignore the concept of contract workers.

The Advantages for Small Business There are real advantages to small business in hiring contract employees, and the cost is not least among them. A business has limited liability with contractors. They forgo health insurance expenses and do not have to be concerned with short or long-term disability. The expense of paid sick days and vacation also vanishes from the bottom line.

Contract workers may also make it easier to find employees with specialized skills. Overall, a small business will have less overhead and the freedom to hire for short-term projects where specific skill sets that full-time employees lack are needed.

The Disadvantages for Small Business The old saying that nothing is free in life bears true when it comes to contract employees too. Many small businesses that run with thin profit margins place a lot of expectations on their staff. Often, employees wear many hats, whereas contractors often have highly specialized skills.Since contract employees work on an hourly or project basis with no benefits, they tend to cost far more per hour or per project.

Another extremely important issue for small business is company culture; it is one-way small business compete against larger companies for the best talent. There is often a relationship-heavy culture, where all employees are not only known by the decision makers and ownership, but also become part of a workplace family of sorts. Contract workers who exist only temporarily within that small business, may not try to be a cultural fit. Existing employees, knowing the contractor is there only temporarily, may also not welcome them into the culture openly.

Advantages for Contractors in Small Business For contractors used to working in a larger corporation, there is something to be said for moving to a smaller business. Often, the learning curve is much steeper in a startup or small business because there is so much to do with fewer employees. And, if the job isn’t a perfect fit, they know there is a limited time they need to endure the job.

Disadvantages to Contractors in Small Business As with larger companies, a contractor who works in contracted roles over the long term may have a more difficult time finding a full-time job. Employers tend to look for long term commitment and proven tenacity when hiring full time workers, and this is where contracting can work against you on your resume. Contract workers also have the vulnerability of no employer-provided health insurance or disability coverage. They are also in perpetual job search mode, having to market themselves constantly to ensure they have a next role waiting for them at the end of the contract.

Each individual small business and each individual employee has unique needs, and the decision to hire a contractor comes with benefits and drawbacks for small business. You should weigh each and determine what cost/benefit means the most to you.