The Gig Economy from a Small Biz Owner’s Perspective: Benefits, Challenges, and Potential

Photo of author

( — May 3, 2019) — “On-Demand Workers” will makeup 7.6 million people by 2020. That’s double what it was in 2015.

The Gig Economy is no-longer a fledgling buzzword thrown around in business journals. It’s a robust and growing facet of our economy that is completely re-shaping how businesses are carried out.

And for small businesses, this presents a shifting landscape with lots of opportunities and pitfalls.

What is the “Gig Economy” Exactly?

The Gig Economy is a business environment consisting of freelance, or contract workers. These individuals aren’t typical W-2 employees who work full-time at the company. Rather, they occupy a subset of the labor force to carry out temporary engagements. 

Freelance writers, coders, graphic designers, and IT consultants are just a few of the roles that a contractor might fill. Roles can even go as high as senior management, with companies seeking out highly qualified people to play a pivotal role in the direction of a business.  

Flexibility is the Name of the Game

Advances in tech have made working in a mobile setting completely feasible, and oftentimes, desirable. On both sides of the paycheck, there are benefits to flexibility.

On one hand, employers enjoy the ability to enter a new market quickly and proficiently. They can adapt to the ebbs and flows of an economy and even navigate seasonal changes.

Concurrently, contractors appreciate the ability to raise kids, work from home and maintain a lifestyle that provides freedom while paying the bills.

Small Business Benefits

Keeping Costs Down

With a freelancer, an employer doesn’t have to pay taxes or workers compensation for the individual. In fact, they don’t even have to pay minimum wage.

No salary or benefits leave the small business nimble and able to pursue an opportunity that’s best for growth.

Regardless of how a small business chooses to compensate contractors, this page makes it extremely easy.


With gig workers, they tend to specialize in highly focused areas, many times acting as experts in their field. This makes them very effective in tackling a task.

Contractors can be regional, close to the project, and fully self-sufficient. They provide their own tech or equipment. None of that has to be provided by the business owner.

Juggling Rapid Growth

Building a workforce to respond to rapid growth is much easier with contract workers. There is no long interview process, no lead time with HR.

Instead, projects and jobs are filled by freelancers who want to work immediately and typically require little to no training.

This also helps a small business groom individuals to become full-time employees.

Small Business Disadvantages


Hiring contract workers can potentially affect quality. Because there is no multi-stage interview, the employer is taking it on faith that the gig worker can accomplish the task. It’s hard to vet their work experience other than through a portfolio.

And even if they are great at what they do, being a freelancer might be a stepping stone to other things. Finding consistent contractors could prove to be difficult.

Maintaining Company Culture

A full-time employee witnessing a contractor skip meetings, wear flip flops and take home more weekly pay can certainly build resentment. It’s important that the business’s full-time employees understand that their standing with the company isn’t simply wrapped up in salary. Perks like health coverage and 401K matching are huge incentives to make them feel valued.

A gig worker’s autonomy also presents a risk. Contractors also need to understand that they’re the face of the company. A customer doesn’t know the difference between a freelancer and a full-time employee.

Without the management coaching that full-time employees receive, a freelancer could fall short of the company’s standards.

Adapting for Success

In a gig economy, small businesses have a wealth of talent at their disposal like no other time in history. Tapping into the contractor workforce gives employers the competitive edge they need to stay relevant. The room for growth is massive.

Learn more about starting a small business in today’s economy here.