5 Alternatives to Hiring a Full Time Employee
As an entrepreneur working solo, you undoubtedly function as the chief everything officer in your business. As you become more successful the next step will start to become inevitable and for any number of reasons you may not be able to hire someone on a full-time basis. For any company, this is a huge step, one you may not be ready to take just yet. Never fear, depending on your needs there are several alternatives to hiring a full time employee if you are not quite ready to make that commitment.
Independent Contractor
One of the most popular ways to access exceptional talent without paying a high salary is to hire independent contractors. Whether you need to implement high level strategy or complete project, this can be done quicky and easily with a contractor.
It is easy to hire a contractor quickly with minimal risk, ramp them up or down as your business may require or have them work with you remotely or onsite. And if things aren’t working out, ending the relationship is a matter of exercising the termination clause in your contract. On the plus side, if the working relationship is successful, this individual may be an excellent first employee for your business or simply remain a long-term partner as you grow.
Pro tip: The IRS has very strict rules (as well as the US DOL and many states) regarding the classification of employees versus independent contractors. Generally, contractors can work for more than one company, will invoice for their services, can direct their own working time and location as well as use their own tools (this includes email addresses). Be careful here – if you classify someone as a contractor and you treat them like an employee, you may be liable for employment taxes and benefit payments.
FRACTIONAL Workers
A subset of independent contractors are fractional workers, also known as part-time or shared professionals, offer businesses a unique and cost-effective staffing solution. By working on a contract or part-time basis, these skilled professionals provide their expertise to multiple companies simultaneously, allowing businesses to access high-level talent without the full-time expense.
Through this model, you may be able to hire a Chief People Officer to develop and execute your human resources strategy on an hourly or project basis. This gets you access to a C-Level leader with the background and experience to drive your company forward. This arrangement is budget friendly and it offers significant flexibility within the working relationship.
This approach is ideal for startups and growing companies that need executive-level guidance in areas like finance, marketing, or human resources but aren't ready for a full-time commitment. Fractional workers bring experience, flexibility, and a fresh perspective to drive strategic growth and operational efficiency. This innovative staffing model is a game-changer for businesses seeking to scale smartly and sustainably.
If fractional HR support is what you're looking for, here's how Peale Piper approaches it.
Temporary Employees
Somewhere between a contractor and an employee, are temporary employees. If you need consistent assistance or you need help quickly but aren’t quite ready to hire just yet, this may be a good option for you. A staffing agency will have access to workers who are often vetted and readily available and the agency is responsible for payroll, taxes, benefits and workers’ compensation. This is a great way for companies to test their capacity to hire a full-time employee before diving in. Under this arrangement, you can model an actual employer-employee relationship, something you are not able to do with a contractor.
This is unlikely to be the best solution in the long run as the costs can add up quickly. Agencies charge on average about 30% more than the actual hourly rate paid to the employee (this is what covers those regulatory costs that you aren’t covering. At some point, (somewhere between three and six months) you’ll be upside down on that spend. You’ll also get an invoice every week and I can’t tell you how much of a pain that is when you don’t have a full-fledged accounting team or if cash flow is still tenuous. Finally, unless you get lucky and your temp is not looking for a full time position or is otherwise willing to commit to a long-term temporary arrangement, the likelihood that they will leave when a something more suitable comes along, is high. Therefore, I would not recommend hiring a temp in a critical role.
Interns
College students are a great resource to get work done at a reasonable price, because they are often looking for opportunities to get direct job training, resulting in a win-win for employer and intern. Internships can be paid or unpaid. I recommend erring on the side of caution and offering a paid internship versus an unpaid one. The U.S. Department of Labor and certain states, such as New York, have strict guidelines about qualifying an internship as unpaid. The trickiest requirement is ensuring that the business is not deriving immediate benefit from the work of the intern.
Additionally, it is getting less likely that a student will readily accept an unpaid internship unless your business operates in a highly sought-after field, such as fashion or entertainment, where the experience is valued over pay. If it is important that you offer an unpaid internship, consider working with a specific college or university to offer college credit in exchange for the internship experience.
Regardless of the type of internship you offer, it is important that you have the time and energy available to train, mentor and coach your intern. If you are not able to make the effort here, it is better to consider one of the other options on this list.
Friends & Family
Finally, I’d be remiss if I didn’t at least mention that friends and family are viable option for pitching in to help your business on a limited basis. While this is probably your easiest option, the combination of business and personal can be tricky to navigate. If you decide to take this path, it is imperative that you communicate clearly, establish boundaries and offer fair compensation for the services they provide. There may be some legal and tax implications to consider as well if you are working with your spouse.
Regardless of which one of these options you chose, be aware of the potential pitfalls. We can help you determine which option is best for you and your business. Get in touch.
