EP. 016

Costs vs. benefits: Hiring extra help as a freelancer

Freelancers, as teams of one, sometimes need support. But the question is: Do you hire a subcontractor, or an employee? And what are the costs vs. benefits of the two? Paul and Kaleigh share their experiences on the topic and talk about why it’s important to figure out which is best for you now–before you desperately need the help.


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Transcription

Paul:                I’m so excited to talk about this topic today because I think that, it’s something that you don’t necessarily think about when you’re starting to freelance but I think it’s something that a lot of freelancers and up having to do or even just wanting to do, and that topic is Subcontracting, or when you need to hire subcontractors, or even when you need to think about hiring an employee. Because sometimes freelancers want to move from being just a one person business to a slightly bigger or even bigger business. And freelancing can be a great start for that. So I want to talk about that today.

Kaleigh:           Yeah, let’s get into it.     

Paul:                Alright, so have you ever hired a subcontractor for any projects that you’ve done.

Kaleigh:           So my experience with hiring subcontractors is pretty limited. I’ve only done it probably a handful of times (less than five). And I’ll get into why I did that a little bit later in the podcast. But it is important to know kind of what you’re getting in to when you do it because you don’t want to just do it kind of flying by the seat of your pants and you kind of get into some hot water with that.

So I think it’s good to talk about it and kind of walks through the dos and don’ts and what does it mean to be a contractor versus an employee and things like that, so you’re on the same page before you get into it at moment in your life where maybe you need a subcontractor or an employee.

Paul:                Maybe we should start there, I think, is why it might make sense to hire a subcontractor and then we can get into the employee stuff later. Because I don’t even have any experience with that but we can talk about it.

Kaleigh:           Yeah, I don’t have any employee too.

Paul:                We can talk about it nonetheless. I know some people who have done that. So why would you want to bring on a subcontractor or why have you in those five or so times that you’ve done that.

Kaleigh:           So in my experience there’s been two scenarios in which hiring a subcontractor makes sense. The first one is when I’m just crazy busy and I’m totally maxed out and I know that if I try to push myself and do too much the quality of work is going to go to crap. So I basically just handed off to somebody else and I let them know that the situation is that this is going through me for another client. I fill them in on the background and then they will help me with the overflow work. So that’s the majority of the subcontractor relationships that I’ve had with the past.

The other time I’ve had to work with a subcontractor is related to when I get really sick. Because I do have some kind of ongoing health issues to where sometimes there are days or weeks where I am just not functioning at full capacity. And again it’s like, “Ok well, if I want the quality of work to be good and I want to maintain this business relationships I need to have some help.” I need some support at getting the job done do that deadlines aren’t missed and so that the quality of work doesn’t suffer.

So both situations are really great times to have a network of people that you can hire as subcontractors. And if you feel comfortable handing off work too. I think that’s a big part of it too.

Paul:                So that was going to be my next question and I was veraciously typing it into words as you were talking because it reminds me of this. How do you know who to hire as a subcontractor? How do you know?

Kaleigh:           So if you haven’t listened to the episode on how to make freelancer friends go into that right now because we kind of talk about it there. I mean, subcontractors don’t have to be your friends but they need to be the people that you know and trust and who’s work that you’ve seen, basically be the same work as you’re doing.

So if it’s in my situation, I have a fellow writer who works with a lot of the same clients. She knows the same subject matter I do. Our writing voices are very similar so that’s just seems a logical person that I can hand off projects too because she really gets what it is that I do. She knows the kind of clients that I am working with then the outcomes that needs to happen. So she is somebody that I feel really comfortable passing along those projects too. So what about you? What is you experience with this?

Paul:                I played with a bunch of different ways so I guess I’ll get into those right the second. I never hired a subcontractor to do design work other than because for a while my wife and I were travelling for about three months of the year. And it was like overlanding stuffs so like camping in middle of nowhere and it was typically in the states so there weren’t data plans back then that were really good.

So I would get somebody that I knew to be like the Paul on demand. Like if something came up with a client I would give them a month or two notice saying like, “Hey, I’m going to be away for August, September, October, Novemebr. If something comes up and you cannot wait contact my buddy Fran and he’ll take care of you. But I’m away if you need work done I’ll do it either before or after. If something comes up in that time you can hire him.”

Kaleigh:           I love that.

Paul:                Yeah, because like sometimes you want to be away and not work. I don’t know. Some people like to work while they are on vacation. I’m not one of those people. I also find this really hard too, like I’ll have intentions of like I’m going to be away for a couple of months. I’ll just work every day. No it’s not going to happen.

Kaleigh:           Yeah. You kind have to do one or the other.

Paul:                Yeah. And I’ve had a couple of times where I’ve been like got pneumonia or something. I think it’s really hard to work when you have pneumonia or that kind of stuff. The other times and I don’t say I played with this because I tried it and I didn’t like it was I hired people on contract to do other aspects of a project, basically where I would be managing them.

So I would bring on a writer that I would pay not the client or I would bring on a developer that I would pay not the client. And in theory that seems good because I’m like, “Oh, I can make more money. I can have a bigger project. There is going to be more budget.” But then I quickly realized how much I don’t like managing people.

Kaleigh:           Yeah, that’s interesting that you say that because that was something I wanted to talk about with this too is when you hire a subcontractor you also have to think about you can’t clone yourself. I mean, it’s not going to be the same product when you are outsourcing any part of the project to somebody else.   

                        So you kind of have to mentally prepare yourself to, “Ok well, even though the other person is doing the bulk of the work. I still might have to come back and finesse this, or edit it, or make it be what it needs to be even though I am trying to be more hands off on the project.

Paul:                Yeah. It’s funny when you say clone yourself. It just immediately reminds me of the book, We are Legion (We are Bob). And the guy dies and he wakes up as software like in the future. And then he is out in space and he needs to create neuron machines like clones of himself. But all the clones have different aspects of his personality so they end up being not the same. It’s like we are legion, and then rockets we are Bob, the name of the series of books.

And so every Bob is a slightly different Bob. Like one is more introvert because he is like a little bit of introvert. One is way more snarky because he has a little bit of snarky in his personality. So even if you could clone yourself you probably wouldn’t get the exact same copy. This has nothing to do with this episode.     

Kaleigh:           It is important to think about those. The future is coming.

Paul:                Exactly. If you want to learn about one neuron machines and software cloning, read We are Legion (We are Bob). It’s really good book.

Kaleigh:           Book recommendation, you’re welcome!

Paul:                It was written by a guy who lives in British Columbia as well. There is a lot of good authors who live where I live, so I’m pretty happy about that. But yeah, back to the topic. I think that it’s important to think about that aspect of it. So if you’re hiring a subcontractor that you are in charge of you are responsible for that person. If they screw up it’s your fault and it’s your responsibility to the client. If they are like late, you are late. Like you have to own their actions because basically they are working for you, so I tried that I didn’t like it. Some people are much better managers. I know that I am a better doer than a better manager.

What I’ve done after I tried that and it failed spectacularly was to bring on partners on the projects instead of subcontractors where the client would work with that person directly, pay them directly. But I would work with that person. The best example with that is my friend Sherie Hanson. She is a content writer for websites. I was a designer for websites so I would tell my clients or potential clients, “If you want to hire me that’s great. I’m doing websites.” I’ve seen in the past that if clients hire a content writer as well as a designer the project is going to get done faster with less stress and it’s going to have a better end result.

So I was basically like the best sales person ever for hiring Sherie because she is awesome in what she does. But I saw that in the past, if she worked on their project, it would get done and it would be better. So I would end up the client to hire her separate from me but her and I would work together on the project because content and design kind of go hand in hand for web projects.

So that ended up working really well. One because I’d suggested Sherie because there is no managing required. She is top of her game, wonderful, awesome, freelancer. I too feel like, I might not like be the best designer we aren’t talking about talent. By saying that I’m going to do something I’m going to get it done, no hand holding, no babysitting, no micromanaging. So when looking for partners for projects I always look for people who are like that. Who I didn’t have to manage who could just do their work, the client would hire them directly. If they screw up it’s not my fault. Although it’s kind of my fault because I suggested them but not at the same level as a subcontractor.

So I feel like that was kind of the balance that I found. Same with developers, if there was a developer required for a project I would suggest a few or suggest one. And if the client hired them I might hire them directly. They didn’t go through me so I didn’t have to manage anyone or anything. I just collaborated with that person.

Kaleigh:           I think that makes a lot of sense, and it has happened to me a lot too, very similar situations. And again, I think that just reinforces the importance of building not just relationships with different people. But having really solid relationships with a few people who do similar work and that understand what it is that you do and that are open to the idea of referring projects too. And that you’re willing to return that favor to them as well. Because that’s a huge part of referrals and getting repeat work.

It’s just having a core group of people who you trust and know and kind of mutually respect. And it just kind of fuels the referral engine I guess because you guys are working on similar projects. You can send things back and forth and it’s very organic. Like I just think it naturally makes a lot of sense to have those types of relationships.

Paul:                Yeah, and you basically can build the app especially once you work with somebody a few time then there’s that relationship there where you know you work well together there. And also as far as the client is concerned it’s like. I’ve worked with Sherie and I probably ended up working with her for about 10-12 years.

Ok, I worked with Sherie for 10 years on a whole ton of projects like we work really well together. You’ll going to get a much better end product. It becomes a no brainer and it almost becomes like you’re building a mini agency of people that you work with. Like I wouldn’t feel bad if Sherie work on a project without me and vice versa, like, it’s just we are freelancers. We just do the work we want to do.

And it reminds me of, I don’t know if you know who, you’re not really in the design world so maybe not. But there is this, Meg Lewis, runs Ghostly Ferns. And she calls it kind of like a new breed of agency. And they’ve actually won agency awards which I think is really interesting. And the way that Ghostly Ferns works is they are just a group of freelancers but they make an agency. So they don’t have to work on projects. They only get paid based on projects they worked on not for the projects they don’t. You get to basically pull together your A Team of people for every specific project. If you need an illustrator and a writer, well, they have an illustrator and a writer. If you need like web interface design and programming well they have an interface designer and a programmer.

So you basically build your team and you don’t pay for the people you don’t need. So from the clients perspective it makes sense because you’re not paying a ton of overhead for people and skills you don’t need. And on their end it makes sense because you are only working on the projects that require your skills. And you can work on other work if you don’t.

Kaleigh:           I love that.

Paul:                Yeah, and like they won an award. She is ridiculously smart and ridiculously talented, that also helps. But the way that she’s kind of built this kind of loose net company agency group for freelancers I think is really smart. I think that’s a model that I think it work for other people as well if that’s kind of the vibe that you want for with the type of business you want to run.

Kaleigh:           Yeah, and you could even do that on a smaller more simplified scale. Like one of the things I do is I keep a Google spreadsheet of writers that I work closely with who specializes in different areas and so if I get somebody who comes to me and has a request for various specific type of work like crypto currency is the one that keeps popping out right now.

It’s hard to remember what everybody does even if it’s a small group of teners. So I go to my spreadsheet and I find that person’s contact. I got what their specialty is in there and so I can just quickly and easily pass along their referral for that very specific type of work. And again, that’s good for use, the freelancer because then you are connector of people. And then people remember that quality about you and come back to you for other things too.

So again it’s good for the people who you are sending work too. They can return the favor and it just makes the whole process easier because you don’t have to remember, “Wait, what does that person do again? Oh yeah, they specialized in this thing. Here is the email address.” It says just a ton of ties.

Paul:                Yeah, that’s pretty smart. I like that. It makes a lot of sense to keep a spreadsheet because it’s really hard to remember. I think the note that I will put on this conversation is that if you’re doing work that is a referral from another freelancer and you mess it up, you’ve let down two people. You’ve let down that client who is paying you and you’ve let down that person who referred you.

                       

Because in a referral you are passing along trust by proxy, right? Like you are saying, “I trust this person, potential client. You should trust them as well.” So I’ve referred work to other people who haven’t done a great job and I’ve never referred them again. Because I just don’t want to look bad.

Kaleigh:           Right. And you really will get one chance to screw that up. It only takes once before somebody is like, “No thanks. I won’t be doing that again.”

Paul:                Exactly because I think about it. I haven’t done client work for probably five years and still possibly weekly maybe one every two weeks I get people emailing me like, “Hey, I know you don’t do this work anymore. Who can I hire?” And so like referrals keep coming in especially if you’ve done okay with freelancing or you’ve done it for just a really long time.

People still ask me for web design referrals and it’s been years since I’ve done that. So yeah, it’s hard if you mess that up to come back from that because there are some people like maybe they were just having an off month. But like I’m not going to risk my reputation by recommending somebody second time if they didn’t do a great job the first place. And I follow up. I ask clients if they’ve hired somebody how that project went every single time.

Kaleigh:           And you should.

Paul:                Super, super picky about that kind of stuff.

Kaleigh:           So speaking of that let’s talk about expectations. And the difference between contractors and employees. Let’s talk about the different expectations for the two and kind of what you can ask for versus what you can’t with those two different types of working relationships.

Paul:                Yeah, I think that’s a really important thing to talk about. So I think it’s important thing to have a clarification for when you’re working with clients because I think sometimes clients want to treat freelancers like their employees. Sometimes you want to treat your subcontractors or freelancers you hire as employees. And there are differences.

Kaleigh:           There are. The big one that jumps out for me is when you can tell a subcontractor versus an employee to basically have something turned back in or like how to do the work specifically. The big difference between the two is that an employee you can say I want you to use this program and I want you to have it turned it on this day by this time and I want you to walk me through the steps that you’re going to use because I want you to follow my process whereas with the subcontractor they have a lot more freedom and flexibility. As long as they are meeting the deadline you don’t get a lot of say on anything else. You can give them a deadline that’s a project agreement. But you can’t tell them you need to use a Mac computer and I want you to follow Steps 1-5 that I’ve outlined right here. And I need you to have this to me by 4 o’clock on the 14th something like that. You know, it’s got to be a lot more open and flexible.

Paul:                Yeah, you can’t tell them when to work as well.

Kaleigh:           Right, exactly.

Paul:                It’s just your client can’t tell you that you have to work from 9:00 ‘till 5:00. Or they can’t tell you that they have to be your only client. It’s just like when you are subcontractor you can’t tell them that you are their only client. That’s not how freelancing works.

Kaleigh:           Right.

Paul:                So all of that kind of comes down to when you’re hiring somebody as a subcontractor you have to think like I can’t tell them all of these things. Maybe I need to look for somebody who is just good at their job like when I’m hiring freelancers now, and I hire probably three or four on the regular for work that I have for my tiny business. Most of this like I’ll hire my copy editor, Mat. How I look for freelancers for my own business is I would rather pay more and get the best freelancer who knows what they are doing then hire somebody for much cheaper and have that hold their hand in any way.

Like for Mat I shared a Google drive folder with him. He gets a notification if I create a new article in a new drive doc with that and then you just edit. I’ve never talked to him on the phone, never talked to him on Skype. I don’t know what he sounds like. Our emails are single emojis and he just get his work done and I love him.

Kaleigh:           Oh, you sound like [name unclear – 18:55] He’s like he is my best friend. He and I still sometimes never talk.

Paul:                I just wish I could have that thick mustache.

Kaleigh:           Yeah. You’re getting close. If people could see you right now they would see that you are getting close.

Paul:                Exactly, just a little bit. It’s never going to be like [name unclear – 19:12] but that’s ok. I think for me that’s the most important thing is that I don’t want to have to deal with the freelancers I hire. I just want them to do what I’m paying them for. So I will look for the experts in that industry. I’ll pay premium for that which I’m happy to pay because it saves me time. If I’m hiring a freelancer it’s because I don’t have time to do that work. If I have to manage them that would be taking up time, so it would end up being a lost for me.

         And so I think if you’re looking for people to hire you have to think, because sometimes it could be the opposite. Sometimes you don’t have the budget but you do have more time so you may want to hire somebody who is a bit more junior. Who may require a bit of hand hold thing or management which is fine if that’s what you’re looking for. But I think you have to be clear going into it that who you are looking for because you’re getting two very different people if you are hiring the cheapest person versus the most experienced person for the job. Same with if you bring somebody on for a client work.

And I think what you said in the beginning is key, like if you’re bringing somebody to help you do the skill that you do they have to be on par with your skill level. Otherwise, the client is going to be pretty upset. If they hire you and they expect like your level of expertise and they get like junior level of expertise. And I’ve had clients complain about this in hiring agencies where they’ve been like [unclear – 20:44] off to a junior person not the agency and they are paying top agency pricing and getting junior work. If you are freelancing you’re not going to get away with that more than one time. Like, it’s not just going to happen.

Kaleigh:           You’re not. You know, it depends on how you do your own business too. Like is that something you are okay with depending on the subpar work that you may be passing along as your own. That’s a poor reflection of you or the other side of that is if you’re wanting to fix it up before you send it over you have to be aware that you are going into this with, “Ok, I’m hiring this person to do this work but I’m also going to have to invest on a significant amount of time polishing it and getting where it needs to be before I can submit it.” So is that worth it?

Paul:                Yup. What would be the circumstances where you would consider hiring an employee? I’m just curious.

Kaleigh:           I don’t know. You know right now at least at this stage in my life and with the business too, I just don’t see that in the cards for me. I’m very ok with being just me forever. And again that’s right now maybe that will change in the future but I like the level of work I have. I like how I’m able to manage things. I guess the only way I could see myself hiring an employee is if I eventually wanted to. No, I can’t see it.

Paul:                I could see your wheels turning in your head.

Kaleigh:           Yeah, no it’s not going to happen. At least not right now. And you can probably speak to that pretty well too. I mean you are writing a book on that topic. Well, I think it’s in the editing phase. It’s getting close to being done.

Paul:                It’s done. It’s just it is not going to be released for a year. It’s been finish. I finished writing it in October. And it’s been finished, the copy edits, for about a month. But publishing, shrug emoji. I don’t know.

Kaleigh:           There is a book on that from you.

Paul:                There will be eventually. Yeah, and I mean I think I kind of feel the same. It’s like I don’t want. So I’ll tell a story, so my buddy and I in Toronto because I live there probably like 20 something years ago. He started working for himself basically the same week that I started working for myself. And we both proposed to our now wives the same week as well which kind of funny. And then we ended both being in Los Angeles like the week after so that we could celebrate which is kind of like weird serendipity.

Anyways, that’s not the story. Lots of marriage and proposal stories. That’s not for this show. So him and I started working for ourselves basically the same week. So about two years in we were both super super busy and I decided like, “If I’m busy I’m just going to raise my rates.” So I’m just going to keep raising my rates until it makes sense where my schedule is kind of like full but not ridiculously full.

And so he decided that since I’m so busy, I’m going to bring on a junior designer and then like fast forward another two years and he had like 4 people and then another two years, he had about 8 people. So he had basically a small agency of about 8 people. And after those years I was still working just for myself freelancing.

And it’s funny because like he’s a great designer, really good at work, really good at communication, like we had basically the same skillset across the board. And he went the agency route and he hired employees and I went the I am not going to do that. And I am just going to freelance. It’s interesting because we both talk all the time about the because we were both really curious about like how we started out the same and we’re basically the same and we just made one decision that kind of forked off. We talk about this a lot.

It’s really interesting because there is no perfect answer. Like I think he really liked managing people and he’s good at managing people. Definitely I am not. If I had a certain agency at the same time as him my agency probably would have failed because that’s not a skillset that I have, and he ended up doing well. But now he has actually gone back to freelancing because he liked it for a while and then he just decided. It ended up being, I’ve heard this from a bunch of people like it’s stressful when you are responsible for somebody’s salary. I wouldn’t know how to deal with that responsibility.

Basically a Peter Pan but also I feel like I wouldn’t be good at dealing with the responsibility of like if you have to let somebody go that works for you. Like maybe their kids are in college. It’s tough. It’s a lot of responsibility and I wouldn’t know how to deal with that in that situation so I wouldn’t put myself in that situation. And it was tough for him to scale back down and to basically. He is slow like he is the nicest guy in the world so I guess he’s different from me in that way. But he slowly let people way ahead of time, I’m ramping down.

And it was interesting because when the market was really really good he was making so much more money than I was just because he was able to take in more projects, bring in more people. The amount of revenue he was doing in the years that were awesome was just like insane. And I was just doing pretty much the same.

But then when times are slow there were two recessions or .com bubbles and burst. My income didn’t really change. It change a little bit because sometimes marketing budget just do shrink but people do hire freelancers who don’t charge as much as the agencies when times are tough which is a good reason to be a freelancer sometimes. And it was tough for him because he would have the number of employees that he needed to go through like booms it during busts, and it’s tough. It’s just really tough, so it was interesting.

And I don’t think, like yeah he is a freelancer now. But I don’t think he made the wrong choice and I did the right choice. I think he made the right choice for him and I made the right choice for me. And we just both ended up in places that we didn’t think we would because that’s just how life goes.

Kaleigh:           I think ultimately you just have to really be honest with yourself about who you are and like what you want out of your freelancing career. And if you could answer that question you will know the answer to it, should you work with a subcontractor or should you hire employee or employees.

Paul:                Yeah, I think that’s the main message of this episode. If you get to decide what your business looks like because it’s your business.

Kaleigh:           That’s right.

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