In today's rapidly evolving business landscape, leveraging the gig economy has become a powerful strategy for small businesses looking to scale efficiently. Hiring freelancers offers unparalleled flexibility, allowing businesses to access specialized skills on-demand without the overhead costs associated with traditional employment.

However, there are drawbacks to consider as well. This article will outline the pros and cons of using gig workers, freelancers, and contractors. You'll also learn some systems to put in place to get the most out of this strategy.

What is the Gig Economy?

When we think of gig workers, a vision of Uber and DoorDash drivers comes to mind. However, this is only a small share of the real gig economy. In fact, this segment also includes the growing population of freelancers and contract workers, meaning that turning to this area can provide access to a wide variety of skill sets. Among other things, your small business could pursue talent in:

• Graphic design

• Administrative support

• Content creation

• IT support

• Bookkeeping

• Computer programming

• Advertising and marketing

To understand the scope of what we're talking about, let's look at the numbers. In 2024, the size of the U.S. gig economy is expected to top 76 million people. Compared to a labor force in the country of about 167 million, that means that nearly 46% of workers participate in some form of the gig economy.

Of course, these figures include people grabbing a few extra dollars in an occasional side hustle. But there are many highly skilled professionals who have chosen to offer their services as freelancers. As a small business, you can tap into this expertise to take your startup to the next level.

How can utilizing the gig economy benefit your small business?

Any small business needs to stay nimble. That way, you can respond to a fast-changing environment and metabolize your rapid growth, which could come at unexpected times. Leveraging the gig economy offers flexibility in multiple areas, providing significant value for your operation.

Meanwhile, there are other upsides as well. From lower costs to access to rare expertise, reaching out to part-time contributors can give you an edge. Here are some of the benefits you can expect from tapping into the gig economy:

• Flexibility in scheduling: Freelancers don't need a full-time schedule. You can use as much (or as little) extra help as necessary.

• Scalability (as needed): You can grow or shrink your capacity relatively easily, letting you respond to market demands.

• Seasonal help: Does your business see predictable spikes in activity during certain times? Gig workers can provide a critical lift during those key moments.

• Unwanted commitment avoidance: Hiring a full-time staffer involves significant risk. Freelancers and contract workers come with less long-term commitment.

• Cost savings: There are financial benefits to the gig-economy route, including scalability, the lack of long-term commitment, tax savings, and reduced benefits.

• Rapid role fulfillment: Once you have your gig structure in place, you can often shorten the amount of time needed to find the talent you need.

• Diversified available talent pool: Combined with a remote structure, a gig approach means taking advantage of geographic diversity and a set of workers who might not be available for more permanent positions.

• Access to specialized skills: As we've noted, the gig economy has expanded to include professionals with high-value expertise. You can use this to fill out your team with specific skills you need for particular projects.

• New perspectives: Having an outsider participate in a project lets you benefit from a fresh look.

• Talent pipeline development: Today's freelancers could become tomorrow's full-time staffers. By engaging gig workers, you develop a try-before-you-hire way to build relationships that could streamline your next recruiting venture.

What are some disadvantages?

We've looked at some of the powerful upsides you can expect from tapping into the gig economy. However, you should go into the endeavor with a complete picture of the risks as well.

There are challenges that come with using freelancers and contract workers. Knowing these will let you judge if the gig economy makes sense for you. At the same time, having these drawbacks in mind can help you minimize the impact. Here are some of the key disadvantages that come from using gig workers:

• Potential for high turnover: Gig workers might not be stable in their positions. As a result, you might need to fill roles often (or even continuously).

• Constant onboarding/training: Each time you add a gig worker to your team, you'll need to train and onboard them, which requires an investment of resources.

• Less control over process and deadlines: Gig workers often can't work a nine-to-five schedule. You'll need to give a little on this front, understanding that certain points related to deadlines and timetables will be a matter of negotiation.

• Communication challenges: Especially if you're attempting to manage a remote workforce, including a freelance element can create complications in how to disseminate information and coordinate productive discussion.

• Resources required for oversight and management: Someone on your staff will need to manage your gig workers. Make sure you budget for this oversight.

• Possible issues integrating with the rest of your team: Try to avoid a divide between freelancers and your permanent staff. The closer you can bring them together, the better results you'll get.

• Limited growth in most cases: You can't assume your gig workers will stay with you for the long haul. Unlike full-time hires, you likely won't benefit from upskilling and development over time.

Where to start with your gig-economy strategy?

Don't rush into the gig economy. Instead, start with a deep dive into the available options. From there, develop a detailed plan for bringing in the freelancers that make sense for you. This organized approach will let you maximize the benefits while minimizing the potential drawbacks.

With that in mind, here are some steps you can take to build a strong foundation for a gig-economy strategy:

Identify the right (and wrong) conditions for using gig workers

Leveraging the gig economy can bring significant value to your organization. However, as we've seen, it can also lead to some drawbacks. As such, it's important to pinpoint the areas where it can deliver the most upside, while the disadvantages remain minimized.

Develop a system for finding and hiring gig workers

To take advantage of this strategy, you'll need to find the right talent. There are many online resources to facilitate this process, from broad freelancing directories to niche services focused on specialized skills. Discover the platforms that make sense for you and design a hiring process that lets you recruit the ideal gig workers.

Create a streamlined onboarding and training program

Knowing that turnover might be a problem and that you'll need to integrate your gig workers quickly, it's important to have a detailed program for onboarding and training. Limit this early education to the essentials. Get your freelancers contributing as quickly as possible and then target supplemental training down the road as needed.

Implement a program of management and tracking

How is your gig-economy experiment going? Should you expand it? Are there changes you can implement to make the system more efficient? You won't know the answers to questions like these if you don't have an effective system for tracking results.

At the same time, you need an organized management structure. Have clear goals each time you bring in a freelancer. Before they start, develop clear lines of communication and authority, so that you can get the most out of your investment.

Taking advantage of the gig economy

Whether it's graphic design, content creation, IT support, or any of a wide variety of key contributions, freelancers can provide significant value to small businesses. You'll get the agility you need to adapt to changing market demands and seize new opportunities. At the same time, you'll develop a cost-effective way to add critical skills.

By tapping into the gig economy, small businesses can unlock a world of talent. You'll add flexibility, which will help you streamline operations while still giving you the ability to scale quickly when growth hits.

By tapping into the gig economy, small businesses can unlock a world of talent. You'll add flexibility, which will help you streamline operations while still giving you the ability to scale quickly when growth hits. As a result, an investment in this strategy can propel growth without the constraints of a traditional workforce.