By Emily Suess

Does your small business routinely cycle through periods of high and low demand? The constant fluctuation may make it difficult to hire full-time or permanent help. One possible solution is to subcontract your workload and keep your business operating smoothly during periods of high demand.

In order to ensure that you don’t lose money with subcontractors and freelance workers, understand the pros and cons first. Here are six things to do as you evaluate your options.

1. Crunch the Numbers

First things first, do a cost-benefit analysis to determine whether or not hiring a subcontractor can save you money versus other alternatives. In some cases, you might be better off with seasonal help or even hiring a new full-time employee. In addition to wages, you need to determine how much you’d pay in Social Security and Medicare taxes as well as benefits, insurance, and training.

2. Put the Contract in Writing

Never work with a company that refuses to put the deal in writing. There is too much at stake to rely on a verbal agreement or a hand shake. A contract ensures that both parties are in total agreement as to the scope and the costs of the work. It’s also essential for keeping your contractor accountable regarding the specified timeline—due dates and progress checkpoints should be included in the contract.

3. Always Ask for References

Find out if the organization has a good reputation to minimize your risk. If you get stuck with a subcontractor that doesn’t meet the standards of your business or your customers, it’ll be your reputation that ultimately suffers. Talk to others who have worked with the subcontractor to determine how frequently problems arise and how quickly and professionally they are able to resolve disputes or complaints.

4. Hold Him/Her Accountable

It’s your job to monitor a subcontractor’s progress on a regular basis. If you wait until the end of a project and discover they failed to meet your standards or ignored the terms of the contract, you’ll be sorry. Address problems as soon as you see them, and make sure you notify the subcontractor of your concerns verbally and in writing.

5. Be an Active Participant

Your role as a supervisor or manager during the contract period isn’t just to point out when things go wrong. You should be actively coordinating efforts with the team to make sure they have all they need to do the work. Communication is essential, and you should be willing to listen as well as give directions. Encourage them to come to you with problems rather than try to save face or cover up issues.

6. Make Sure Your Business is Protected Financially

Finally, before your subcontractor begins work, you need to make sure he or she has the appropriate insurance in place and that you have been added as additional insureds for the duration of the contract. Because these stipulations are typically required by your own insurance, you could be denied coverage if you fail to secure these additional protections.