When companies become a success quickly, they often think they need to staff up just as rapidly. But there is an alternative. By bringing on freelancers to manage the growth while keeping costs down, businesses are able to remain nimble and adaptable to external changes.
The myth of employee numbers
Many companies tout their growth by the number of employees they’ve added during a period of time, but profitability is a more accurate statistic. Often, additional employees will mean that companies are forfeiting profit by not being as efficient as they could be.
According to Fundera financial products, the most relevant indicators of success before staffing are strong business demand, healthy profit margin, annual revenue growth, and increase in sales. While hiring is a good sign, companies should be cautious of draining their cash flow, interfering with productivity, and mismatching roles.
In April of 2016, Amazing Academy LLC laid off 24 of its startup’s 64 workers. The company that operates as Amazing.com had added too many workers, becoming sluggish and bloated.
“I read countless books that gave me that advice, but when in the trenches of growth, I made the mistake of rushing hiring and forcing growth,” he wrote. “It’s easy to hire people. It’s horrible to fire people.” Matt Clark, CEO and co-founder
Since then, the company has experienced growth by expanding in Dublin, Ireland and China.
The high costs of staffing
If you’re starting down the path to hire new employees, you may face some tough decisions. Hiring can be complicated and it takes a lot of skills, time, and money to find the right person to fill a position. It takes 150 days to hire executive positions, and 75 days for non-executive ones. Staffing up drastically during growth times can also lead to laying people off during slow periods.
Some high costs of staffing include:
- Recruiting, career events, job board fees, background checks
- Onboarding and training
- Taxes and employee benefits
Forty-three percent of finance leaders say their biggest challenge is hiring and retaining top people. Organizations that aren’t able to satisfy their staffing needs are shown to suffer more than financially. Employee turnover has ramifications that can involve a loss of productivity, institutional knowledge, and team morale.
The freelance alternative
In 2018, Forbes listed high turnover as a rising trend, with employee burnout becoming a leading cause. The line between personal and professional lives is also becoming increasingly blurred due to technology. And millennials want the flexibility to adjust their career path to fit their individual goals. Though millennials are the catalyst driving the freelance economy, they aren’t the only ones—49% are more than 50 years old.
Mass migration to the freelance economy is accelerating the full-time talent gap, as more than half of the U.S. workforce—finance and accounting professionals included—is expected to be freelancing in the next decade. This popular alternative to hiring permanent employees is expected to double over the next four years.
Get exactly what you need
If organizations ignore independent workers, they are likely missing out on a pool of highly-skilled, virtual team members. Four out of five managers report an increase in productivity due to their freelance staff member. Another benefit to hiring a freelancer is that you can look for specific skills that will match the tasks you need to be done. Rather than hire for an overarching role like accountant or analyst, bringing on the exact resource for the exact project you have will save time and money.
A freelancer with the same skill set and industry knowledge can be quickly plugged in to fill that gap and equalize workloads. Managers report that freelancers contribute to their team 40% faster. Not only are these freelancers ramping up to the task-at-hand more quickly, but they are also bringing their knowledge and experiences to the organization, allowing for quicker innovation and faster adoption to environmental changes
Why a Paro finance expert is the right choice
Paro empowers finance and accounting professionals to embrace the future of business. We match the top 2% of freelance bookkeepers, accountants, financial analysts, and CFOs to finance teams of all sizes. Established middle-market companies, high-growth startups, and enterprises trust our freelancers across a wide range of industries. We provide high-quality, flexible, cost-effective support when your team needs it.
Contact us today to start your organization’s journey with a freelance finance or accounting expert.