Neil Lewis - Innovative Entrepreneur

Solving problems by growing profitable businesses @neil_lewis

4 reasons why companies are frightened of engaging freelancer workers

Let’s be honest, the benefits of working and engaging freelancers are strong, powerful and effectively communicated from this website (Enterprise Freelance Fair) and many others – not least the National Freelancers Day run by PCG.

So, why don’t more businesses take greater advantage of freelancers? We’ve being doing some digging and here’s what we found…

1. Legal Risk

Large organisations are scared of the legal risk. That is, they are obvious targets for the Inland Revenue and hence, they need to be squeaky clean on issues of National Insurance and IR35 and some take the decision to avoid all freelancers simply to get legal certainty.

How do freelancers counter this? Well, one obvious first step for all freelancers is to work through a limited company. However, even better, is to be in an agency structure – ie. more than one partner – as that makes it beyond doubt that the freelancer is a company and not an employee in a freelance legal structure.

2. Completion Risk

The bigger concern of small firms is not the legal risk, many are not aware of it, anyway. Rather, it is the concern that the work might not be completed.

In this case, the best solution is to solve this through building a strong relationship. That is, if the owner trusts you – and trusts that even if you do get another freelance job or piece of work, that you’ll complete your work on time and to budget.

It helps, in this case, if you are local to the firm. It makes it easy to meet up and deliver the service. It also helps, too, if you agree for the company to pay you on time – perhaps on weekly invoices with a % held back until the deliver of the whole project?

Lastly, in case of more serious issues – illness, injury or worse – working with similar freelancers – and having an agreement that they will ‘cover’ if a serious problems arises, gives extra confidence to the project owner.

3. Values Risk

Some companies are worried about using freelancers because they believe – rightly so, that the values of the company are bound up in its employees.

Of course, this can include values such as an overly conservative nature and unwillingness to innovate – hence, not all values enshrined in a company’s people are for the better – and some values are good at some times, and not so good at other times.

Hence freelancers can argue, with good reason, that they represent the values of thriftiness, hard work, getting the project done and innovation. Not all employees have these values – certainly, not to the level of many career freelancers – hence, most businesses might like to add some freelance values to their team?

4. Retention Risk

The forth and final reason is the concern about retention of key staff.

This is aligned to the completion risk I mentioned above, but is different in that it highlights that finding the ‘right’ people is hard work and expensive for all businesses.

It is expensive because entrepreneurs so often get it wrong – and both have to pay for costly errors in recruitment fees and contract termination costs; but also there is the cost of the missed opportunity.

Retaining high quality staff in a team or business is critical to its survival.

However, I believe that carefully selected freelancers are more likely to remain in a company than many similarly gifted employees.

After all, freelancers need to build clients and client testimonials – so, an unhappy client does more damaged to a freelancer than a disgruntled employee leaving a firm to go to another.

Equally, freelancers face a significant ‘acquisition cost’ – that is, the cost of acquiring a client is significant and having sunk that cost, most freelancers are unwilling to lose the client for small or minor issues.

For this reason, so long as you are hiring freelancers from your local region, my experience is that freelancers stick around longer and do more to help if a hand over is necessary.

I’ve also experienced a number of freelancers disappear off onto new projects only to return to my projects at some later date. This does not happen with full time staff who nearly always leave for good!

Summary

My experience is that engaging freelancers effectively and appropriately – particularly, finding local freelancers, can solve all of these issues – bar the legal issue for big companies – better than full time staff.

I’m delighted to include the freelance values of innovation and experimentation in what I do – it is more fun, and, I believe represents a core value that all growth businesses need to internalise – and that there is no better way to do this than with a pool of freelance talent.

 

 

 

 

 

 

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Written by Editor on December 12, 2011 and filed in Entrepreneurs, Freelance Jobs, Freelancers, Innovative Entrepreneur, News, Opinion , , , ,


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