Choosing Between Employees & Partners
The number one rule in business is to never give out equity. I would much rather pay someone a good chunk of change than give out a percentage. When I had my first business I had a hard time figuring out my role when I bought in to the company. Was I an employee or a partner? My “employer” made a good call on that one.
I’m suggesting that you learn from my experience, and do the same. Never give up a percentage of your business, especially if you’re going to hit it out of the park. If you’re willing to give up a big piece of your business than you’re expecting to lose. Does that sound like you? Expecting to lose is a big challenge that you need to overcome.
Employees VS Independent Contractors
Now that we have the foundation down; understand this, there are huge advantages to having independent contractors. NOLO has some very interesting points in their legal encyclopedia of whether or hire an employee or independent contractor.
Pros of having a Independent Contractor:
- Saving Money
- Flexibility in Staffing
- Reduce your exposure to headaches
- Unemployment Cases
- Minimum wage issues
- Sick & vacation time
Cons of having a Independent Contractor:
- Less Control over them
- Worker come and go more easily
- Limited rights to fire a independent contractor
- Increased risk of government audits
Given my business experience I will always take a independent contractor over an employee. NOLO makes some very good points, but my biggest point is mindset. Unfortunately, many employees have an employee mindset. They are looking to get paid the most while doing the least amount of work.
When contracting out work you’re able to get a better quality worker because it their time, not yours that their wasting.