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How Can SMBs Tap into the Gig Economy?

by Kaiti Norton

The gig economy is rapidly growing. SMBs should understand the risks and rewards that are in store should they choose to hire a gig worker.

According to a 2017 study, Freelancing in America, the gig economy is expected to represent 50% of the U.S. workforce by 2027. While this statistic might seem a bit staggering, consider the implications it might have on your small business: hiring temporary staff comes with tremendous flexibility, but also considerable risk. The short-term nature of gig work means you can add a specific skill set to your team to accomplish an ambitious goal, but it also increases the chances of an unexpected bump in the road. Keep reading to learn more about the risks and rewards of tapping into the gig economy and how you can hire a gig worker for your small business.

Risks of the gig economy

First and foremost, the biggest risk of hiring a freelancer (also known as an independent contractor or a gig worker) is reliability. When you have a full-time employee, you can generally assume they have a vested interest in the same goals as you. They're more likely to be a team player with an "all hands on deck" mentality. With freelancers, however, you need to be extremely articulate when defining the scope and expectations of their project. There should be no confusion as to what they are responsible for completing and the due dates for each deliverable, otherwise you could end up with a project that requires more time and money than you initially budgeted.

Similarly, freelancers set their own working hours and priorities, so it's unrealistic (and unreasonable) to expect your project will always be number one. This also means it's more difficult to receive an immediate response to an urgent issue that comes up unexpectedly. For example, if you notice a typo in some ad copy or something on your website breaks, the freelancer might not be able to address the issue for another 24 hours.

Freelancers also pose a security risk if your project deals with sensitive information. This isn't necessarily more of a risk than you'd assume by working with a new hire or a third-party vendor, but you'll want to ensure you have similar vetting procedures for freelancers as the ones for full-time staff. Before you grant access to any of your systems or data, have your freelancer sign an iron-clad confidentiality agreement so you have recourse in the event that something goes wrong. Make sure you're only providing access that's absolutely necessary to get the job done. This will help minimize any threats to your security should your freelancer have nefarious intentions.

Recommended: Too Many SMBs Are Counting on Free Consumer Cybersecurity Apps

Rewards of the gig economy

Now for the good news: the gig economy gives you tremendous staffing flexibility. It enables you to hire a specialist temporarily so you can complete a task or accomplish a goal that's outside your normal business operations. You might hire a freelancer to redesign your logo, produce a TV commercial, or complete a regularly occurring job like filing taxes or creating financial reports. Many gigs don't require the freelancer to be on-location to get the job done, so you don't have to worry about maintaining enough real estate to accommodate another person. This saves on operational costs while also alleviating the need to provide benefits or other requirements for full-time workers. No matter the gig, you can find someone with highly specialized expertise without committing to bringing them on full time. 

This also means your workforce can adjust to your budget constraints or the amount of work available. Need someone to manage your social media accounts so you can focus on other responsibilities during your busy season? A freelancer can help with that until things slow down and you can take over again. Need to cut costs when faced with an unexpected expense? It might mean you need to put off a project or take on more work yourself, but reallocating your freelancer budget is easier than trying to trim down operational costs.

Likewise, most freelancers have thick skin and understand business decisions aren't personal. While it's best practice to see a project through with the independent contractor you've selected, their feelings won't be (or at least, shouldn't be) hurt if you work with someone else on a future project. Unlike situations where you have to let go of a full-time employee, there's no stress or discomfort in choosing not to work with a particular freelancer again.

Recommended: Less Than a Third of SMB Leaders Think Their Teams are Effective

How to hire a gig worker for your small business

Now that you have an idea of the risks and rewards of the gig economy, let's take a look at how you can bring a gig worker onto your team.

  1. First, you should identify the criteria and expectations of your job. This includes the duration of the project (when you expect it to be finished), the skills you require, any platforms or information the freelancer will need to be able to access, and most importantly, how much you're willing to spend.
  2. Explore project-based job boards like Upwork, Fiverr, and GigPro for prospective freelancers who may fit your needs. You can post a job listing so they can come to you, but you can also actively recruit freelancers who seem like a good fit. (Pro tip: Many freelancers will list their status on LinkedIn, so take advantage of this free resource if you're not already!)
  3. Review candidates based on the criteria you identified ahead of time. You may find it beneficial to look at portfolios and previous client feedback, or you may prefer to have a conversation with the candidate to get a sense of how you might work together. Before making a decision, make sure you understand how much each candidate will charge for your project.
  4. Prepare the scope, contract, confidentiality paperwork, and any other relevant documentation. As mentioned above, this will help prevent any miscommunication about what's expected from both parties for the duration of the gig. It will also give you a legal foothold if your freelancer behaves inappropriately or otherwise acts against your best interests.
  5. Kick off the project and provide any necessary access privileges. Give any context you think will be helpful for your freelancer to determine the best course of action, but remember that you shouldn't provide any access or information that isn't directly relevant.
  6. Hold regular meetings to track progress. It's worth setting a cadence for progress updates that everyone agrees to ahead of time. This will help minimize any anxiety you might have about whether your project will be completed on time!
  7. After all expectations have been met, pay your final invoices and consider sharing your feedback about the project. Regardless of whether it was a favorable experience or not, your freelancer deserves to be compensated for their time. (Plus, not paying your invoices could result in legal consequences!) Sharing your experience is also beneficial for other companies that might be looking to hire someone for a similar project, and will help the freelancer understand what went well and what could have been better.

Hiring a freelancer is a great opportunity for you to grow your team and expand your productivity while maintaining flexibility for your business. Though the gig economy can present some risks, putting specific safety measures in place will help ensure your project is successful.

This article was originally published on Friday Dec 18th 2020
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