Should You Hire Full-time Employees or Work With Contractors?
Startups worldwide are wrestling with the following question: should I hire full-time employees or
work with part-time contractors?
Last year, COVID-19 forced leaders everywhere to tighten their budgets. In many cases, this
meant letting go of full-time workers and plugging gaps with freelance contractors. As the world
recovers, startups are now wondering if they should hire back up to pre-pandemic levels.
After all, many companies have found success bringing in part-time help for specific needs. And
more workers are choosing flexibility over job security. In 2019, 57 million people were doing
freelance work in the U.S. alone.
So, what should you do?
The truth is, there is no clear answer. However, there are certain things to keep in mind as you
determine the best path for your business. We’ll cover all of those here. As always, we want to
make sure you have everything you need to be successful.
The Case for Full-Time Employees
As a startup, there is no substitute for building a talented and passionate team. You need the
absolute best people on your side who are willing to jump into the trenches and bring your
company’s vision to life. Even better, you need partners who are excited by the idea of taking
ownership in a groundbreaking company that may or may not be around in 3-5 years.
It’s hard to find this level of enthusiasm in a contractor. If you want your startup to be the one in
ten that survives, you need all the enthusiasm you can get.
With full-time employees, you can also foster long-term relationships that will produce
exponential returns over time. In other words, you have the ability to create a strong foundation
of institutional knowledge that will transfer seamlessly to new hires.
In addition, teams consisting of full-time employees have the potential to tackle big, ambitious
projects that would otherwise be beyond reach. You can invest significant time, money, and
energy into a multi-year endeavor that could ultimately differentiate your business.
Full-time employees also buy-in more to the cultural side of startup life, which is really important.
They tell their networks about how excited they are to be working for an innovative organization
and help spread the good news about what you’re doing in the world. On the other hand, contractors often work for multiple companies and don’t tend to advocate for any single
To summarize this section, there are still many advantages to recruiting full-time employees.
The Case for Contractors
Now, the case for contractors.
It’s easier than ever to hire top-notch talent located anywhere in the world. Startups can search
far and wide for specialized skill sets that meet their exact needs. They can hire the best of the
best for short-term, tightly scoped projects, knowing that they don’t have to pay exorbitant
salaries and benefits over the long run.
Startups that are comfortable working with contractors can employ a “plug-and-play” model, only paying for certain skills when needed. If money gets tight, working with freelance contractors can be a great way to keep costs down without pausing projects.
On top of that, some contractors are open to full-time employment should the right opportunity
come along. So...when companies find an awesome contractor who is a great cultural fit and
ready for the startup life, they can confidently make a full-time offer.
In this way, working with contractors can serve as a trial run for your business. You can
minimize the risk of making a bad hire and evaluate people based on real work that they would
be doing for your startup.
So, there are compelling reasons to go the contractor route, even outside of trying times.
The Right Choice Depends on What You Need
At the end of the day, there is no one-size-fits-all answer. In fact, a single startup may take a
hybrid approach and hire full-time employees for some positions and contractors for others. You
may even fill the same position in multiple ways over time, depending on your needs.
The great thing about living in an interconnected, remote work-friendly world is that you can
adapt when circumstances change. Recruiting and hiring is more fluid than ever, which means
you can fulfill your business requirements without worrying about whether or not you’ll make a
major hiring mistake.
To that end, we can help you strategize around the best path forward for your startup. Our team
of experienced recruiters, business mentors, and former entrepreneurs understands how to
build organizations that thrive in the modern world.
Want to talk about your hiring needs? Contact us today.
Ray Gibson is founder and CEO of Funded.club. He brings 20 years of experience in recruiting across Europe, North America and Asia and 5 years running his own startups.