Do you know who your “Dream Clients” are? I’m sure you do. What about your “Dream Collaborators”? As a consultant, I know who my dream clients are (ambitious entrepreneurs and growing nonprofits!), but it’s important for you to know if we’re a dream collaboration!

How can you know if we’re a good match? Think about these things before you hire any freelancer or contractor:

What does their track record look like?

Any consultant you are considering should not only be able to pitch well, but provide examples of work they have done on similar issues or with companies similar to yours in size.

(As an example, I’ve worked with for-profits and nonprofits ranging from $100k to $20M in size, and have dealt with financial and investment issues across the board.)

What is their cost structure?

Don’t look ONLY at who offers you the cheapest rate. Experienced consultants or freelancers may bill higher, but because they resolve your issue more quickly you’ll ultimately pay less. A consultant with less experience may bill at a lower rate, but may avoid providing an end date or try to draw the work out indefinitely which will cost you far more in the long run.

(I started working with nonprofits a decade ago, and although most of my clients work with me long-term, they always know what to expect from me and when.)

How do they communicate?

Effective consultants are expert communicators. They will really listen to your concerns and provide an unbiased observation about your issues and the various possible solutions. If your consultant doesn’t communicate well, it will impede your ability to integrate them into your team AND your ability to understand what it is that they are doing for you.

(My preferred methods of communication are occasional check-ins via phone or video call and email, which I almost always respond to within a day. A few clients even text me!)

Do they explore the challenges you are facing and establish Key Performance Indicators?

It is tempting to assume you know how to solve a problem once you know what the problem is. With that said, consultants you approach with your issue should try to find the best solution or solutions after reviewing the underlying causes of the problem. Together, once a solution or series of solutions are determined, you and the consultant should decide on the metric(s) of success.

(I cannot stress enough how important it is for everyone to be on the same page – it’s part of why communication is essential! It’s also necessary for consultants to be creative AND effective at resolving your problems.)

Are they transparent with you the way you are with them?

To get the most out of any consultant or freelancer relationship you need to be able to share the good and the bad of your situation. If you are struggling to understand your finances or your accounting team needs help, the consultant needs to know. That requires honesty on your part. In that same way, they need to be open and honest about their experience and capabilities before they begin any work for you. Trust is a two-way street.

(My clients must be willing to help me understand their business environment before I begin work for them. I start every engagement with a call to dig deep into your business so I know where to focus my work. We get so much more out of our time together if I understand any issues up front!)

So what do you think? Could we be a perfect, dream collaboration?

Set up a call on my calendar or check out my FAQs!

One of the best parts of my job is the fact that every single company or organization I work with is in some stage of growth. Expanding programs, increasing revenue, diversifying scope of services – it all means growth and change. I’ve never been one to sit still for very long so thinking about what’s next excites me.

As organizations grow, we realize we can’t do it all alone and need to bring on help. In fact, I am at that point in my own business – anyone looking for bookkeeping work? I am an awesome manager! Back on topic…

How do you know if your business is ready for an employee on your payroll? Or should you just stick with using contractors?

Let’s first go to the IRS for their guidelines. In short, it all comes down to control.

• Does the company control what and how the worker does her job? You have an EMPLOYEE.
• Or does the worker control her work process, schedule, and equipment? Does she have multiple clients? This is a CONTRACTOR.

It’s important to ask yourself these questions upfront, as the IRS imposes strict penalties for classifying an employee as a contractor (which many small businesses do because it’s a LOT cheaper to hire contractors!).

Unfortunately, even the IRS admits that there’s no magic formula or hard and fast rule about hiring employees versus contractors, so here are a few more considerations:

EMPLOYEES:

• Much more permanent. This can mean increased loyalty to the company, flexibility to take on more than just their job description, and improved workflow due to less turnover. There is the understanding that the assignment is long term and gives an opportunity to build a solid relationship between employer and employee.
• Much more expensive. In addition to salary, employers are responsible for paying workers’ comp, unemployment taxes, Social Security, Medicare, and health insurance (and potentially other benefits!).

CONTRACTORS:

• Increased flexibility. You aren’t tied to a monthly payroll and can hire contractors only as you need them. If the business has a slow month, you don’t have to incur any costs for the contractors or deal with the messy business of letting someone go.
• Decreased cost. The business owner is not responsible for the contractors’ taxes and benefits, computer equipment, professional development, etc.
• Decreased control. You don’t have control over the contractor’s schedule, work flow, or pay rates. You may experience more turnover as contractors find other clients or increase their rates.

And finally, what do your FINANCIALS tell you about your ability to hire an employee versus a contractor?

• Profit margin. Is your profit margin above or below 50%? If it’s consistently below 50% then you might not be ready for the financial responsibility of a permanent employee.
• Cash reserve. How many months’ operating cash do you have in the bank? If it’s less than three, you might want to reconsider an employee since payroll will need to be run regularly.
• Revenue. How consistent are your revenue and cash receipts? Do you have months that hover dangerously close to zero? Your business and revenue streams should be well-established and consistent before taking on the responsibility of an employee on payroll.

I hope that clarifies the question on whether to hire an employee or a contractor. Either way, bringing on additional help is a great indicator that your business is growing and thriving!