Subcontractor or Employee — What’s the Difference?

As an entrepreneur, you likely find yourself wishing for more time during the day, desperately clutching at any new tip or tool that promises to “give you back your time” or help you “work smarter, not harder.” 

Yet, no matter how hard you wish for more, we all have the same 24-hours in a day, and some things are simply non-negotiable (like eating, sleeping, and using the facilities).

You can try all the productivity hacks social media throws at you and, even if they all work (which they don’t),  you’re still going to max out your 24-hour time bank for the day feeling like you need a bit more time — no matter how much you crush being productive.

But wait — wasn’t the whole point of starting your own business to be free?

Free from being chained to your desk and limited on your earning potential because someone else dictates what they want to pay you?

Free from someone else telling you what days you can take off or how many, and what time you have to be at your desk by and when you can leave?

For us entrepreneurial types “hustle” is often our go-to state. 

We like it. 

We feel like we’re in momentum when we’re implementing a new idea, moving towards a new goal, and building to a new and exciting level. 

But often the hustling we end up doing is for our clients, their goals, ideas, and business instead of our own.

The freedom to work when we want, to hustle on our own terms is the entire reason (or at least a large part of it) we started our business. 

This freedom is the key to our happiness and a big part of how we define our own success.

Yet even when we’re at our breaking point, when burnout is peering around the corner at us, we still hesitate to get help.

Why? 

So many reasons — many of which I’ve addressed in other posts.   

The reason we’ll be exploring today is this:

We’re scared to commit and are unsure if it’s better to hire an employee straight out or subcontract the work to someone else (like a VA, for example). 

The Advantages of Subcontracting

When you’re looking for outside help hiring a subcontractor has many pluses…        

• they are responsible for their own office/workspace and equipment,
• they pay their own taxes and health insurance,
• it tends to be easier to change or end a contract,
• they often come fully trained,
• you only pay them for hours or projects as needed (no paying for overtime or downtime)
• as they learn new skills (from working with other clients or through professional development), you get the benefit of that new-found knowledge
• they get it. As a business owner themself, they understand and intuitively grasp the bigger picture and are in it to win. Your success is their success.

The Disadvantages of Subcontracting  

Hiring a subcontractor has a lot of pluses, but there are some minuses as well. For instance, subcontractors…

• often cost more per hour than an employee would and may change their rate at any time,
• are less flexible, 
  • since they work with other clients, they aren’t always able to work the schedule you’d like them to work, 
  • the scope of work they are willing to do is often limited to whatever was included in the proposal. Additional requests cost more or may not be possible.
• they have their own way of doing things and, although they’ll take direction, they often need more formal communication if you need something a specific way or on a specific timeline.

Why would you want an employee?

On the whole, if you only need help…

• temporarily (for a specific project or timeframe), 
• less than 50 hours a month (working on a variety of tasks), or 
• less than 30 hours a week (working on very repetitive/monotonous tasks) 

… than a subcontractor might be the best way to go.

Which one is right for you?

Know thyself.

You’ve gotta put in the research, my friend! Sit on it and think about the following:

• Am I comfortable with giving up control and allowing another entrepreneur to work their magic? Or do I need to be involved more in the day to day life of my biz and have a clearly defined boss-worker relationship?
• Do I need someone to take on specific tasks regularly? Or do I need someone at my beck and call for 8 hours a day?
• Do I have the budget for an employee or a VA?
• Am I comfortable with training an employee and giving positive and negative feedback, or would I rather have someone who is already a pro?

As you answer these questions, your path forward should become clear.

One last thought, if you’re not sure about which way to go, try this.

• First, monitor your time for two weeks. 
  • Write down everything you do in a day and for how long you do it.
  • After two weeks review the list and highlight anything you do that can be done by someone else (such as an Administrative Assistant)
• Make a note of 
  • the total amount of on-going work that you know you could offload to an assistant
  • any special skills or knowledge they must have to complete the tasks
• If you have enough for a full-time employee, you may want to go that route right away. If not, start with a subcontractor and move to an employee as the business and role grows.

Now you. Which one do you think is right for YOUR biz? Leave me a comment and let me know.