January 8, 2021 6 min read
Opinions expressed by Entrepreneur contributors are their own.
If you’re launching a new company, cash is king. With what little startup capital you have, you’ve got to spend it wisely. Ask any founder whose startup struggled or even failed early on and the concepts of both spent cash and bad hiring strategy are likely to come up.
The go-to reaction for a lot of founders is to offer equity instead of a salary or hourly rate. The problem, however, is that this strategy can go south in a big way. Not having a working relationship with your new hire means that you’ve essentially brought on a partner — and a big partner if you leveraged a lot of equity in exchange for minimal or no cash upfront. Given that even freelancers and salaried employees might exit a company for any number of reasons without the additional complexity of equity, this might not be the right route to pursue at first.
Enter the freelance economy. Working with a freelancer is an excellent stopgap, so long as all your documents and expectations are clear at the outset. Get them to sign an NDA? Yes. Work with them hourly until they’ve proven worthy of being offered equity or a bigger role? Also a possible yes.
When to hire freelancers as a bootstrapped founder
Freelancers are often an excellent route to go for a founder who is looking for a way to scale quickly while also staying on a budget. Just take it from Joel Primus, founder of underwear company Naked and author of the book Getting Naked. For him and many other bootstrapping founders, outsourcing certain tasks was the key to being able to scale quickly and effectively.
“A bootstrapped team starts with hiring doers, problem solvers, and those with a deep desire to learn and rapidly expand their skills,” Primus says. Freelancers provide the perfect opportunity to address the overwhelm that easily accompanies the daily experience of a startup founder.
Recognizing that you can’t do it all alone means looking for people to hire. But family and friends willing to do you favors aren’t always the best solution. They might mean well but lack the technical experience or finesse to get the job done. And without much capital to pay, a part-time or full-time employee on the books could direct funds from other places where it’s much more needed.
Primus says, “For time-intensive tasks and projects like research reports, competitive analysis, lead gen and data mining or populating KPIs, hire remote talent on a site like Upwork. This frees up you and your team to execute critical objectives and avoid saying that you don’t have time.”
If you’re still stumped on how to get the funds to pay for freelance contractors, consider government grants, internships and co-op programs.
You can’t do any of this without knowing exactly what things need to be done in your business right now, so don’t rush out and post multiple jobs for freelance work until you’re crystal clear on the roles you need most urgently. If there’s no one on your design team yet and your pitch deck is the most important piece of collateral you’re showing at present, invest the money to hire someone on a site like Fiverr or Crowdspring to get it done.
If a project will take you hours of precious time or produce mediocre results when a one-time or short-term project with a freelancer will yield better results, look for ways to maximize the freelancer’s input.
For example, rather than hiring a designer for a full pitch deck design, pay them for a template. Hire a blogger to create 10 blogs at once that you can drip out over time so that you save time approving titles and editing.
If you hire a stellar freelancer who has incredible talent and deeply connects with you or your mission, you can always use that experience of working together to create a foundation for a bigger relationship or even an employee role in the future. Using freelancers means that you have options and can cross some big projects off your list without losing focus on what’s most important.
How to use employees and contractors together
Freelancers aren’t the only option available to a founder, and while they can help with concrete tasks, you might need a mix of employees and freelancers to strike the balance. Freelancers and consultants will often push back (fairly so) against scope creep, but scope creep and trying to get the most done in tight timeframes and on limited budgets is par for the course in any startup.
Employees can be a better investment when you need to build a team culture and accountability for the long haul. Remember that employees and outside expert consultants can work together to achieve common goals, too, which might be the hybrid solution you need.
Over time, it’s likely a goal that the company grows and needs the regular inputs from a core level of employees at a minimum. It can be really tough to keep great talent early on since there are lots of opportunities for that talent today, especially in an increasingly remote-receptive environment.
Since it’s unlikely that the use of freelance talent will entirely exit your company anytime soon, it’s good to train and empower your team leads about how to find, work with, and build relationships with the right freelance contractors.
As Primus notes, “Often a startup needs to grow into its ideas and ideals.” Bridging the gap with a team of freelance contractors and employees can help you build out the culture, learn some important lessons and get prepared to scale with an internal team that knows how to bootstrap in the job and with freelance talent.