The British employment market is changing. Where once employers and employees expected to have long-term relationships, moving between companies is now a normal part of building a career, adding to the challenges faced by small businesses as they strive to find and retain talent.
More and more small businesses are being launched – around 660,000 in 2016 – and one of the strategies they’re using is to reduce the number of employees they take on in favour of hiring independent contractors. There are multiple advantages to this for both employer and employee, as this article details.
Getting expert help
One of the biggest problems faced by small businesses is that pretty much everybody involved has to be a jack-of-all-trades in order to ensure that everything important gets done. This often means that certain tasks are done poorly or don’t get the attention they really deserve. Businesses are hampered by those weaknesses, leading to them underperforming even when they’re strong in other areas. Bringing in contractors solves this problem because it makes it easy to find individuals who specialise in each task that needs to be done. The contractors themselves benefit because they really get to focus on what they’re good at, much more than is the case in most traditional roles. For instance, a finance consultant who enjoys payroll work but hates auditing can easily make a living doing just the former.
Limited hours, important tasks
There are certain tasks that need to be done in every business, regardless of its size, but if yours is small and still not very productive, they might not require many hours of work. In this situation it makes no sense to hire somebody full time to take responsibility for them, and even standard part time hours can be too much. Bringing in contractors allows for much greater flexibility. It mans that you only need to pay for what actually gets done. From the contractor’s perspective it’s better because they can come in, do the interesting work and get paid for it, then move on to something else instead of sitting around twiddling their thumbs or being expected to take on tasks that aren’t really appropriate for them in order to make up a certain number of hours.
Keeping payment simple
Taking on employees involves a lot of paperwork and a lot of fuss. You have to figure out PAYE and National Insurance and make sure you go through all the proper recruitment procedures. With contractors you can simply hand over the cash when the job is done and have nothing else to worry about. If you’re selling your skills as a contractor then it’s worth asking, is an umbrella company right for you? Handling your finances in this way means that you can enjoy the flexibility and interesting work that comes with contracting while keeping the financial side of it as simple as if you were working for a traditional employer, and not having to worry about the paperwork either.
Cutting down on overheads
For employers, there are other overheads besides those associated with payment that can make taking on employees difficult. When you’re operating on a small scale, simply finding the physical space for everyone to do their job can be a challenge, and you may have to pay for additional equipment or account for additional wear and tear. There can be extra security procedures and background checks required. Bringing in contractors helps you work around a lot of this, especially if you hire them through agencies and bring in different people to do different jobs on different days. It makes life easier for everyone.
When a business is small it really needs to keep putting its profits back into production so that it can grow and improve its stability and market share. Investing in core employees is important but it can’t usually afford to take on new people ahead of each stage of expansion, and as it does expand it needs to access talent quickly. Again, using contractors provides the flexibility necessary to do this. As it grows, it may invite those contractors who really make an impression to apply for emerging full time positions – ideal if they’re happy with the idea of long-term employment as it means they don’t have to waste time on traditional job hunting – and if they’re not interested, they can often recommend talented people who will be.
All in all, outsourcing to contractors as numerous advantages over hiring employees. It may cost a little more upfront but it really pays that back in other ways, so it’s no wonder that more and more businesses are doing it.