3.5 REASONS FOR USING CONTRACTORS TO HELP LAUNCH YOUR BUSINESS

In a recent post, I highlighted 5 deadly sins that entrepreneurs make, and one in particular was titled "Don't Go-It Alone!" . I know this is a tough one because start-ups are almost always cash-strapped, and the thought of hiring an employee just doesn't make sense, yet.

Generally, it makes more sense to bring in a contractor/consultant when you don’t have enough steady work to justify a permanent position.

Here are the top three reasons to hire contractors instead of employees:

• You have specific task that requires a specific skill-set: Even though you would never admit it, as an entrepreneur you may not have a specific skill and you don't have time to learn it. Here is an example: You bring in an person to assemble a piece of machinery that you purchased to produce inventory. Or, you need an IT expert to set up a new server and an office network.


• The task is short-term: The specific job at hand will take a few weeks or months to complete. Here is an example: You need extra techies on hand for the launch of your website.


• The workload fluctuates: The flow of work is not consistent enough to warrant creating a permanent staff position. Examples: You need an accountant who can put in 180 hours a month during tax season but only 50 hours in June, or you bring in a landscaper to plant in front of your shop every spring, but there’s very little for her to do in fall and winter.

Now, you might be thinking that these are obvious. However, here is Reason number .5 ...

• I've made the mistake of having multiple tasks to accomplish such as launching a new website, merchandising the front of a store, managing taxes, building equipment, etc. So, what did I do? I hired an employee to help me. Bad idea, because the employee wasn't very good at anything except the taxes, so everything else was mediocre...at best. Additionally, I started with a motivated employee and turned them into a demotivated employee. Why, because people generally don't like to work in a position where they are only good at 10% of it.
  

To wrap up: I suggest using independent contractors as frequently as you can until you feel that your business is ready for employees. My rule of thumb is if a person can spend at least 60% of their time doing work they enjoy, then go ahead and hire'em. Otherwise, bring on the contractors!

(By the way, take a few minutes discussing contractors with your legal counsel. It's worth the 5 minute phone call to be sure you can use them legally)