Who Should You Hire: Employee vs. Contractor vs. Agency
Seeing growth in your business is both exhilarating and daunting. With it comes the inevitable realization that you can't do it all alone.
You know you need support, but the path to securing it is less straightforward.
Should you hire an employee to join your team, bring in a contractor for specific expertise, or partner with an agency to manage your needs comprehensively?
In this post, I’ll dissect the pros and cons of each hiring option and share questions to help you think through this decision.
Hiring an Employee
Pros:
Understanding and Commitment: Your employees develop a deep understanding of your business and brand and are committed to your long-term goals. That means, you’ll be able to hand over some of the decision-making and representation of the business.
Direct Control and Supervision: You have more direct oversight over your employees, so you can make quicker adjustments and pivots.
Cons:
Higher Overhead Costs: Hiring an employee involves not just salary, but also benefits, taxes, and potential training expenses. This can be a significant financial commitment for small businesses.
Less Flexibility: With a full-time employee, scaling down or shifting focus can be challenging and may lead to underutilization or the need for restructuring.
Risk of Turnover: Training and integrating an employee into your team is a significant investment. If they leave, you’ve lost time and resources.
Hiring a Contractor
Pros:
Specialized Skills and Flexibility: Contractors can bring specific expertise to a project that you may need only temporarily, offering more flexibility.
Cost-Effective: Generally, hiring a contractor is less expensive than an employee since you're not responsible for benefits, taxes, or providing the tools they need to do their work.
Quick Scaling: With contractors, you can scale your operations up or down more quickly without the long-term commitments associated with hiring employees.
Cons:
Less Oversight: Contractors often juggle multiple clients and may not always be available when you need them. That’s why clear communication and expectations are crucial.
Variable Quality: The quality of work can vary significantly between contractors. Start multiple candidates on a test projects and only proceed with the best fit.
Limited Familiarity: Your contractors might not develop a deep understanding of your business and brand, leading to less effective initiatives.
Hiring an Agency
Pros:
Broad Skillsets: Agencies offer access to a full team of professionals with diverse skills and experiences, which would be hard to replicate internally with contractors or employees.
Scalability: Agencies should be able to easily scale their services to meet your changing needs. They typically handle everything without the need for you to manage individual specialists.
New Strategies: Since agencies work with multiple clients in often different industries, they can bring fresh ideas and strategies to the table.
Cons:
Less Control: Working with an agency means you’ll likely have less direct control over the individuals executing the work. Depending on the turnover within the agency, multiple people might work on your project which can lead to inconsistencies.
Generic Solutions: There's a risk of receiving a one-size-fits-all strategy rather than a deeply customized approach. Some agencies apply their “signature approach” to all their clients without taking the time to thoroughly understand your specific business needs or market niche.
How to Think Through Your Decision
Ultimately, the decision between an employee, contractor, or agency should be aligned with your business’s current needs, budget, and long-term goals.
Here are a few questions to help you think through this decision:
What is the scope and duration? In other words, are you hiring for a one-off project or ongoing support? Contractors or agencies can often get started with a one-off project fee and provide ongoing support for a monthly retainer.
How specialized are your needs? If you’re looking for a generalist to help you on many fronts, employees in small but growing businesses will often wear many hats, covering a broad spectrum of skills. On the other hand, contractors or agencies can provide specialized knowledge.
What is the level of involvement and integration with your team? Contractors and agencies can become an integral part of your business but might always be one level removed.
How quickly do you need to scale up or down? If your needs might change rapidly, consider flexibility. Contractors and agencies can be scaled up or down more quickly than employees.
What is the budget? How much can you afford to spend?
