Should I Hire A Part-Time Employee, Full Time Employee, Virtual Assistant Or Freelancer?
There may come a time when running your business becomes too overwhelming to tackle on your own. Are there parts of your business that you could use some support for? And when do you make this decision? Who do you hire: a part-time employee, a full-time employee, or a freelancer? These are questions that a lot of small businesses are faced with at some point.
You know your business best and you know what is best for your business. If you are starting to get overwhelmed and things are piling up, you may need to reach out for support. Look at your financials and see if it is feasible. If you don’t, you may need to get creative with your business and implement changes that can help you get the things that are piling up done or you may need to cut costs in other areas. Then you will need to examine what type of support is needed and how much you will need. This will also great rely on what you can afford. If your business is in need of a full-time employee, but can’t afford one, then you may need to start with a part-time employee or a freelancer for now.
Let’s tackle when you might need to make this decision to hire someone. Maybe business picks up and you are starting to work a lot of extra hours. You have no time for family, friends, or any of the things you used to do in your free time. Then you even start falling behind on the work itself. You can no longer keep up with emails, appointments, production, ordering, etc. You start to lose customers after a while and word of mouth might start getting around and deter any new customers.
Whoa, wait a minute. That’s a dangerous path. But luckily, we are not going to let it go that far. You are going to hire help before you lose anything. You will keep your family time, friends, and your free time. All your customers will continue to receive great service from you and your business. Word of mouth will be positive and new customers will pour in.
Considerations Before You Take That Next Step
So, who do you hire to keep you on the path of awesomeness? Well that depends on a few factors. One of the biggest factors that needs to be addressed is your financials. Do you have the finances to support hiring someone? You need to calculate all the cost for hiring someone, including hourly or salary rate, benefits that will be provided, training costs, worker’s compensation insurance, unemployment benefits, etc. These costs will, of course, be dependent on the amount and kind of help you are needing. Do you need a part-time employee, full time employee, or someone on an as needed basis?
If you can’t afford it but you need it, maybe you need to evaluate some parts of your business that can be cut back momentarily and then add them back as you grow. Choose items that will not affect the integrity of your business.
Okay, what if you have decided that you can afford someone? Great. Let’s look at each option and discover the pros and cons of each to find your perfect solution.
Real Cost of a Full and Part-Time Employee
Let’s take a look at the real cost of these employees. They may have an hourly rate, but you also have to take into consideration other costs associated with having these employees. You have to consider taxes, benefits, and overhead.
Taxes that must be withheld include federal income tax, Social Security tax, and Medicare tax. Certain states may require you to withhold additional state and local income taxes. Unemployment taxes are also required and certain states and types of businesses will need workers’ compensation benefits to be provided.
What constitutes a full vs part-time employee depends upon the employer itself. Some employers require a full-time employee to work between 32-40 hours per week, while others may consider only employees that work 40 hours full-time. The Affordable Care Act defines a full-time employee as someone working 30 hours or more.
Certain employers are required to provide minimum essential coverage to full-time employees. If they choose not to, they will still be charged an employer shared responsibility payment by the IRS.
From the IRS website, we see the percentage of taxes the owner was responsible for with both full and part-time employees for 2018:
|Calendar Year||Wage Base Limit (each employee)||Tax Rate on Taxable Wages and Tips|
|FUTA (Federal Unemployment Tax Act)||
Tax on the first $7,000 paid to each employee
Overhead costs are going to be dependent on what is required for your business to run. Overhead costs include office supplies, rent for your space, repairs and maintenance, marketing, utilities, etc. You need the employee to have a place to work that has the supplies and capabilities available to get the job done.
A study done by Joe Hadzima, from MIT, says that the real cost of an employee can be figured out by taking the base salary and multiplying it by 1.25 to 1.4. In the case of an employee who earns $30 per hour and works 40 hours a week for 52 weeks, their base salary would be $62,400. Their real cost will be from $78,000 to $87,360. That works out to $37.50 to $42 per hour.
Now if you hire a part-time employee, you are really only required to pay the taxes part of the equation. For a $30 an hour employee working only 20 hours a week for 52 weeks, you would pay the base salary of $31,200. With taxes required, you are looking at paying $35,458.80. This works out to $34.10 per hour.
What About A Freelancers Cost?
If you go with a freelancer, you pay $30 per hour. Period. They take care of the other costs. You get someone with expertise specifically for the job you need done. You can also hire a freelancer on a monthly retainer basis or a one-time payment project. The specific job you need done, gets done at an agreed upon set amount. You don’t have to pay by the hour or worry with keeping track of the hours.
When A Small Business Hires A Part-Time Employee
Maybe you can only afford a small amount of support right now. That’s ok. You have to start somewhere. Let’s start with a part time employee. How can this help you and how might it hurt you?
Advantages of Hiring A Part-Time Employee
1. One advantage to hiring a part time employee is that they usually do not require health benefits, paid holidays, sick leave, etc. This will save you money over having a full-time employee that is eligible for these benefits and is usually expecting these benefits.
2. Another advantage with a part time employee is that you can use hours strategically by having them work when they are needed most. This will make sure paid hours are not needlessly waisted while your business is not producing. Also, if you have a meeting or appointment scheduled and need someone to cover while you are gone, you can put them in to work during that time so that you do not have to close or risk missing a customer engagement.
3. And lastly, when you are looking for part time employees, certain extra opportunities open up. You get a wider pool of available candidates to apply. You may get a stay at home mom, that has a degree or years of previous experience and is re-entering the work force, that needs something while the kids are in school. Or you get an older candidate that may have years of experience but doesn’t want to work a lot of hours or can’t work a lot of hours. You may get a lot more variety and get the advantage of hiring someone that is a much better match for your business.
Disadvantages Of Hiring A Part-Time Employee
1. With advantages, comes disadvantages. One disadvantage would be reliability. They are not as committed to your business and may not feel compelled to cover, if you have an emergency come up and need coverage. Or if something in their lives comes up, they may be more likely to not show up when they are scheduled.
2. They lack the loyalty that a full-time employee would exhibit. What if another part-time position comes up that they are more interested in it or it has a better schedule for them. Or maybe, a full-time position becomes available where they are giving them more hours and benefits. You would lose both valuable time and money. Time that you spent training would be wasted and now you have to spend extra time to interview and hire a new employee. And once you hire someone new, you will have to train all over again.
3. You also have to deal with them not sharing your core values. If the employee is not fully invested in the business, they may not be as motivated and productive. They may not be focused on helping your business grow and succeed. Core values will not be as important to them, which can be reflected in their work ethic and customer service skills. You don’t want someone that does not share your enthusiasm and goals to represent your business.
When A Small Business Hires A Full-Time Employee
Maybe you look at your financials and decide you can afford a full-time employee and you need a full-time employee. What can you expect? Let’s see.
Advantages of Hiring A Full-Time Employee
1. Full-time employees tend to be more reliable. They depend on your business for their livelihood. If you are giving them benefits like health insurance, paid holidays, sick leave, and a retirement plan, they are more likely to work hard and show up to keep their position.
2. The time you spend training them will be a better investment for you. It may be an investment up front, but in the long run this will save you money by having a committed employee and not having to constantly train new employees.
3. They will also have more investment in your business and likely share your same core values. If an employee is invested, they will care about the business enough to protect it and promote it.
4. A full-time employee will be a constant representative of your business, someone your customers get to know and become familiar with. This can both help build trust and give comfort with your customer base, keeping them from going elsewhere.
5. If you need to take a vacation, you are sick, or just have meetings or errands to run, they will be the backbone of your business to keep it running while you are away. They will know the ins and outs of running it, because of the time they have spent working there already and the training that you provided in detail.
Disadvantages of Hiring A Full-Time Employee
1. The first obvious disadvantage will be the cost to have a full-time employee. Most expect benefits and you will be paying for full-time hours.
2. The hours may not be used efficiently if you have periods of down time. You will still be required to pay them for their time if they are there. This can cost a lot of extra money that could be used somewhere else.
A Virtual Assistant
One specific type of freelancer is a Virtual Assistant. What is that? A Virtual Assistant is a self-employed individual or independent contractor that provides expertise in a variety of different service areas from the comfort of their own home. They can offer professional assistance with an array of areas like administrative, organizational, social media, design, and so much more. If there is a task or area you don’t have time to take care of, don’t know how to, or don’t like to, there is a Virtual Assistant out there that has the time, knows how, and loves to do it.
You can find a Virtual Assistant that is available when you need them. If you need a job done at a specific time, just look for someone available at that time. If there are no time constraints, just look for the specialty you need taken care of. A lot of Virtual Assistants work on their own schedule to allow them to be highly effective during the time they choose to work.
What type of help do you need?
Are there certain areas you need assistance with? There are many areas that a Virtual Assistant can help in. A few areas that are popular that you may need are:
- Administrative: customer service, bookkeeping, research, data entry, ordering
- Organizational: scheduling, calendar management, organizing files, email management
- Social Media: creating content, moderating comments, advertising
- Content Writing: articles, blogs, brochures, newsletters
- Websites: design, creation, landing pages, SEO
- Email Marketing: create sequences, schedule emails
- Design: graphic images, logos, PowerPoint presentations
Why hire a Virtual Assistant?
A Virtual Assistant is by far the quickest, easiest, and smartest choice. You have a lot of expertise to choose from that will save you time, get your business growing to heights you never imagined, and add to your overall efficiency.
- More Cost Effective- No need to provide benefits, office, training or equipment, or pay taxes
- Saves You Time- You can focus on the more specialized parts of your business and have more free time to do what you really want to be doing
- Helps Grow Your Business- They can manage your social media to drive more business to your business and manage your customers through correspondence and scheduling
- Reduces Your Stress- Get your focus and drive back in line knowing things are being done by someone with specialized knowledge and skill
- And so much more!
What Can A Small Business Expect With A Freelancer
Now, let’s look at hiring a freelancer. If you don’t know what a freelancer is, it is an independent contractor that works for their self. They charge a fee for their services. It can be for an ongoing time with a client, a certain task performed, or a one-time project. With this, there are again some advantages and disadvantages.
Advantages of Hiring A Freelancer
1. One important advantage is the skill that they bring to the table. They are usually highly skilled in their area of expertise and may not require any training at all or very little training.
2. You can also use them only when you need them. They may have a higher hourly rate up front, but they do not require you to pay benefits, taxes, or provide office space or supplies.
3. In these times, technology is abundant. There are many places and platforms available to find freelancers for just about any job you can think of for your business. This gives you a great opportunity to be selective and really find a great fit for you.
4. Freelancers own their business. Their reputation is valuable to them and the key to their business. They will deliver their best quality work and service for you because that is how they build a successful business. Repeat business and customers are a strong desire for them to have a constant revenue stream.
5. Freelancers can be found all over the world. This vastly expands your pool of candidates. No waiting for that perfect someone from your area to walk through the door. All you have to do is turn on your computer and search or put out an ad. With all the resources and freelancers out there, the search should not take long for you to find qualified help. The abundance will help guarantee that you find the perfect fit for your business.
Disadvantages of Hiring A Freelancer
1. One big disadvantage is that you will not necessarily be their number one priority. It is their business; they can work when they want to work. So, make sure you clarify this before they start. Nothing worse that expecting something to be taken care of, only to find out they are not available the hours you need them.
2. You might have to look into a backup freelancer. You never know when something may come up in the freelancer’s life causing them to be unavailable to you. This may not affect them as much as it will affect you and your business.
3. Although they may be highly skilled, they may not know exactly how you like things to be done in your business. So, you will have to train them if there is a certain way you like it ran. This can be a little challenging when they are not right there with you for training. They are not at your business every day, which means they may not know the ins and outs that could be essential to running your business. And if it is something that needs a lot of oversight or monitoring from you, it might be better to have an onsite employee.
4. Back to you not being a priority, they may not have the loyalty that a full-time employee would have. A full-time employee is invested in your business and wants to help it grow and be successful. A freelancer is not necessarily dependent on your success. Yes, they want to keep you as a client and it helps them if you are growing, but they can find other clients if things are not going well with your business.
Your situation may change with just a little help and make hiring a full-time employee possible. Then again, you may not need that much help so a part-time employee or a freelancer will suffice. No matter what, just keep moving forward and make your business the success it is meant to be.