Capitalizing on the Increase in Freelance Talent

Is your small business taking advantage of the surge in freelance workers?

Overhead view of a person sitting at a table with a laptop, camera, and cup of coffee

The numbers are almost hard to believe. About one in three U.S. workers — more than 53 million people — operate as freelancers, making some or all of their income as independent contractors outside a traditional 9-to-5 job, according to the Bureau of Labor Statistics. As we move into 2017, the freelancing trend shows no signs of slowing down and is having a significant impact on how companies operate.   
 
For small business owners, the explosion in freelance workers provides access to a fast, flexible, and highly skilled workforce, says Joseph J. Fahey, CFA, Senior Business Transition Strategist with the Wealth Planning group at Wells Fargo Private Bank. Contract workers can help you fill talent gaps, penetrate new markets, and outsource tasks so you can focus on your business goals.

Freelancers today work in fields across the economic spectrum. Many are talented young contractors who appreciate the flexible hours and the diversity of jobs. Others are experienced veterans who want to scale back their hours or be able to work from home. So how can they fit into your business?

Identifying opportunities
To stay competitive, small businesses need to figure out how to make the most of the freelance boom. "Business owners need to anticipate change to stay ahead of the curve, and that means adapting to this gig economy," Fahey says. "It's important to think about ways to bring in the talent you need to execute your strategic vision. Hiring independent contractors can give you access to a tremendous amount of expertise and experience at a minimal cost."  

Fahey recommends thinking about areas where you may not need a full-time position, such as functions within human resources or information technology, or even an experienced sales director who can mentor full-time employees. "I've seen businesses bring in people with 30 years of experience to mentor and coach a young and talented team of professionals," he says. "They really help accelerate the learning curve with emerging talent and take you to the next level."

Another area where many companies look to a freelancer: the CFO position. Because many independent CFOs often work with 10 or 20 different clients, Fahey says, they're usually experienced problem solvers who bring new ideas and best practices to the table that you can customize to fit the needs of your business to help it run more efficiently.  

Executing your strategic plan
You'll have to pay high rates to get the best freelancers, but in the long run you may save money because you don't have to cover their health insurance, vacation days, and other benefits. You simply pay them on a per-project or per-hour basis.

That doesn't mean managing independent workers is simple. "Your company needs to be able to design a blueprint and use freelance talent in an efficient way," Fahey says. "Once you hire someone, you need to get consensus between the company and the contractor as to what the expectations are and what the compensation is, and then put it in writing."

Fahey adds that it's important to bring in a human resources expert to make sure you comply with IRS rules regarding 1099 employees, because the IRS has been scrutinizing the practice in recent years.

"At the end of the day, what you're trying to do is execute your strategic plan with the most talent possible at the lowest possible cost," Fahey says. "If you're not doing that, someone else will."

Michelle Crouch writes about consumer finance, parenting, and more from her home in Charlotte, North Carolina. Her work has appeared in Reader's Digest, Parents magazine, and The New York Times.

Image by iStock

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Wells Fargo Wealth Planning Center, part of Wells Fargo Private Bank, provides wealth and financial planning services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a legal or tax advisor. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

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