As a small-business owner, one of the most important decisions you’ll face is how to build your team.

Do you prefer the reliability and accessibility of permanent staff, the flexibility and cost-effectiveness of freelancers, or a mix of both? Understanding the pros and cons of each option can help you make the best choice for your needs.

Freelancers

Freelancers are typically hired for specific projects that require defined skills. Whether it’s designing a website, creating a marketing campaign, or handling short-term technical support, they bring expertise to the table with virtually no strings attached. Here’s when freelancers may be most advantageous—and where they may fall short.

Pros
One of the biggest draws of hiring freelancers is the ability to keep costs flexible: they often work on a per-project or hourly basis, which means businesses can tailor their spending to the scope of each task. This allows companies to avoid fixed, ongoing payroll costs, particularly when their needs are seasonal or unpredictable.

Freelancers also bring more specialized expertise that may not be available in-house since employees usually need to wear multiple hats. As a bonus, these individuals often offer fresh outside-the-company perspectives that might not be present among full-time staff.

Another key benefit of working with freelancers is their flexibility: they may be available during typical off-hours, including evenings or weekends, to help meet project deadlines. And since they generally work remotely and independently, your business can tap into talent across the globe.

Cons
While it may be tempting to go bargain shopping with this option, keep in mind that you may get what you pay for. For example, a low-cost freelance graphic designer might deliver work that looks good initially but lacks the polish or originality of a more experienced professional, ultimately requiring substantial fixes. In this case, trying to save money up front can result in time inefficiency and frustration.

Even when you do hire one with an extensive résumé, there’s still some risk. First, their expanded availability, while a positive, can also be unpredictable, potentially resulting in communication issues, delays, and even missed deadlines. More importantly, since freelancers often juggle multiple clients, they may not have the bandwidth to deliver the quality you expect. Such issues tend to be less problematic with employees, who usually have fixed availability and are more likely to prioritize their work as part of their jobs.

Employees

Opting for a permanent team brings a different set of benefits and challenges, making them best suited for businesses looking for long-term stability and growth. Consider these factors when deciding whether it’s the right avenue for your business.

Pros
Perhaps the biggest upside of hiring permanent employees is stability for both parties. First, they are more likely to be invested in your company’s long-term success, not only because they’re committed to the work but also because they’re incentivized through regular paychecks, benefits, and advancement opportunities. In short, they’re more likely eager to grow with your company, saving it from the frequent costs of turnover and recruitment. Plus, someone who’s been embedded in it for several years can provide consistent leadership, make more informed decisions, and offer deeper insights into improving processes.

Another key advantage is the level of control you have over your team. Permanent employees are typically available full-time, making it easier to manage schedules, set clear expectations, and align their skills and strengths with your company’s vision. If you’re facing a last-minute change or urgent task, for instance, having such dedicated employees can make it easier to reassign priorities and get things done quickly.

Cons
The financial commitment of permanent employees is substantial. Beyond salaries, businesses must cover benefits, taxes, and other associated costs, which can add up quickly. This is even more challenging for companies with variable demand, such as seasonal ones, who may have to pay full-time wages even during off-peak periods when their teams aren’t fully utilized, making the burden of these fixed costs difficult to manage when revenue fluctuates.

Such an investment also comes with its own set of inherent risks and may not always pay off. For instance, spending many-hours and resources developing a promising employee only for them to leave for a competitor that offers better career advancement would largely be a waste of time, effort, and money.

On the other hand, if you don’t invest in team members’ development, you run the risk of stagnation—in more ways than one. An employee who isn’t improving their skills or growing may become a liability, holding the company back as it evolves or, worse, torpedoing coworkers’ morale. And if you don’t make the effort to help them stay updated on new tools and trends in their area of expertise, it could impact your business’s overall competitiveness.

Making your choice

The best decision for your entity will likely depend on its goals, financial situation, and nature of the work involved. Take a tech start-up, for example. In the early stages, hiring freelancers could be a smart choice. With a tight budget and the need for specialized skills for specific projects, the company can utilize their expertise without committing to long-term salaries or benefits while maintaining flexibility as it grows and shifts focus. Conversely, an established retail store or restaurant might do better with permanent part-time and full-time in-house staff since the nature of such businesses typically requires constant operations and customer-facing roles.

For many businesses, though, a hybrid approach that combines both types of workers is the most effective strategy. In this instance, a core team of permanent staff handles the day-to-day processes while external contractors are brought in for specific projects or during peak seasons. Such a balance allows leaders to both maintain the stability and continuity offered by a dedicated team and remain agile and cost-effective when additional expertise is required. It’s a flexible and scalable solution that aligns with the evolving needs of most growing companies.

By weighing the benefits and challenges of each hiring approach, you can choose the solution that best fits your goals and resources, ensuring that you’re set up for success in the future.

TAKE ACTION:
Review your current short-term and long-term company needs to determine which could be better served by a freelancer and which would benefit from bringing on another team member.