When Should You Consider a Contractor in Your Scale-Up Journey?

Scaling your business can be challenging.

How do I hire? How many people I need? What skills do I need today - and just as important - what will I need tomorrow? Where do I start?

As you move through your scaling journey, the skillsets you need within the business will evolve and the time it can take to develop your current workforce can sometimes be the blocker for your business meeting its growth goals.

Unfortunately, being the best product in market doesn’t mean you’re going to dominate in your sector. It’s quite often the businesses who get the top talent in first who are able to perfect their product or service faster, better and more efficiently.

That’s where a detailed recruitment strategy can help.

 

At each stage of your life cycle, you need to ensure you’re getting the right people in at the right time – whether that’s permanent or contractor talent.

Permanent hires can be an effective method of building your team for the long-term – however quite often, there can be immense value added from utilising contractor workforce to accelerate your business – especially during the early stages of your growth.

Typically at Pre-Seed to Seed level, businesses will have a short 9-15 month timeframe to be able to prove to their investors and the wider market that they are worth investing in.

One of the biggest challenges at this stage is making this period of time last as long as possible whilst raising more funds. Usually, the first thought for many businesses is to bring in a permanent software developer, here the thought process is very much ‘surely they’ll be the cheapest solution and I know they will get the job done!’.

And whilst there are many talented people out there who want to join your mission, having a permanent employee can come with risk.

If they are the only technical person in the team, who’s continuing their work when they’re on holiday? What happens if they are unwell and unable to work? What do you do when, within a few months, they realise the role isn’t quite for them?

Making the wrong hire at this stage could be the end for your business - and this is why utilising contractor recruitment can be the safer, more secure option.

 

By hiring a contractor, you are able to forecast your exact expenditure to make sure you have enough time to cover the development period.

You are able to select from highly experienced individuals, with a track record of working in and growing alongside scale-ups, having assurance your product will be built to a high standard.

If the work is done ahead of schedule, you will have the flexibility to end the engagement sooner and re-distribute your funds to other areas of the business. It will also cover your business for the “worst case scenario” – such as an investment market like we’ve just seen over the last 18 months.

If it becomes clear fund raising will take longer than expected, there is no question over redundancy or not being able to pay your workforce. You can spread the development time by reducing the days worked and give yourself enough time to steady the ship.

Series A-B is typically where we often see products start coming to market - which creates a whole new challenge for your business. The team will have grown and you’ll likely have some brilliant people who are on the mission with you. The business may even start to see some revenue coming in - however, it’s more than likely that the growth will still come from further investment which in turn, can cause challenges.

 

Ensuring investment money is used wisely, the business is growing and employees are happy and enjoying their work is a tough balancing act.

There will likely be projects that are critical to the business, but less exciting or motivating for employees to work on when they can see the roadmap of new products to come. Here is where hiring a contractor can be a huge benefit.

Here, you can bring in contractors to make sure the current product is maintained and its performance increased to a very high standard, allowing your workforce to do the work they enjoy and continue driving the business forwards. This will hugely help retention of your very best as they are no longer overworked and allowed time to focus on the work they enjoy most.

There is also another opportunity here. Should you not currently have the skills in your business for the next phase of your growth, contractors can be a brilliant source to upskill your current teams. By bringing in experts, not only will they support on the delivery but they will be able to share learnings from experiences with other business to develop your teams, which in turn will help provide your current team with new skills and opportunities and ensuring all knowledge is kept within the business.

Series C+ is probably where you’re most likely to start utilising a larger amount of contractors. At this point investors will start to ask questions around profitability and how revenue goals will be met – a challenging time for every scaleup business.

Of course whilst revenue goals must be hit, there also has to be considerations towards further development of the product; such as looking to expand to new markets and industries.

You may often hear of the 80/20 split. By having 20% of your product development as contractors, it provides a level of flexibility to bring in highly skilled people to support in driving the product forward and keeping control over costs if the sales targets don’t meet that of the development roadmap.

 

Want to find out how else contractors could benefit your business? Download our latest guide here.