Small businesses hire freelancers to help out with a variety of tasks, such as accounting, bookkeeping, marketing, human resources, and more. Delegating tasks to an expert contractor frees up a small business owner’s time. With more time, business owners can give more attention to running their business.
Besides the flexibility and affordability associated with hiring a freelancer, they also offer specialized experience. Furthermore, freelancers often can collaborate with a business very effectively.
However, as your company grows, you may find yourself reevaluating costs, staffing, and other aspects of your business. The following circumstances, both in and out of your control, might cause you to rethink your relationship with freelancers in general or to cancel your contract with an existing contractor.
Financial Reasons to End a Contract
When you are running a small business, one of your main focuses is finance, including your budget, expenses, and income. When an aspect of your company’s finances change, you may need to reconsider your expenses, including your choice to pay a contractor.
Here are some financial reasons you might have to end your relationship with your contractor:
- Your budget can no longer support the services of a freelancer
- You have decided to hire someone as a full-time employee to perform the services
- You cannot afford the adjusted rates of your freelancer
- You are not accumulating the return you thought you would by using a freelancer
Contractual Reasons to Call it Quits
When you work with a freelancer or consultant, you likely have a service contract. This type of contract outlines the scope of services, payment, and other important project details, such as the length of the agreement.
Because a freelancer is not your employee, you do not have direct control over their productivity, work methods, or even hours.
If a contractor has failed to meet the obligations of their contract, you might consider ending your arrangement.
Specific situations include when a contractor:
- Misses deadlines or is consistently late with turning in projects
- Fails to execute a project correctly or in line with company’s objectives
- Fails to meet an agreement on contract specifics when it comes time to renew or renegotiate contract
- Delivers sloppy or incomplete work
Your Business’s Changing Priorities
Deciding what is best for your business can be a full-time job and you are expected to shift priorities according to what you deem most important for your business’s future. This could include upping your hiring efforts, changing business locations, investing in re-branding, or downsizing due to economic factors.
Changing priorities can affect your service needs directly. Here are some situations where you may need to reevaluate working with a freelancer:
- You’ve decided to cancel the project or terminate the agreement (if it’s within your contractual rights)
- The contractor’s services are simply not needed (project has ended)
- You’ve decided to work with another freelancer
Another possibility when working with a freelancer is that you simply don’t feel like they are the best fit for your business. This could be for a handful of reasons, including:
- Poor communication
- Unprofessional attitude
- Lack of skills/qualifications to execute the project
A Freelancer’s Choice
You’re not the only one who can end your agreement. A freelancer can also determine when your working relationship has come to an end. There are many reasons they may move on, and the reasons could be very similar to your own.
For instance, a freelancer may have decided to work full-time, and therefore needs to cut back on the number of clients they can contract for.
Other reasons could be that the client is violating terms in the contract, is late to pay, or is simply too demanding or high-maintenance.
Ending the Relationship in the Best Interests of Both Parties
No matter who ends the working relationship between you or your contractor, it’s important that you both leave on good terms.
Contact the other person well in advance and explain that you have decided to end the agreement. Your contract should state how much notice you need to give if you want to end the contract early.
How you get in touch depends on your relationship (or what is written in your contract). If you’ve been working together for a while, a phone call might be the best way to reach out. For circumstances in which you’ve only been in contact virtually, an email could be more appropriate.
Expect to be asked why you are ending the contract. A freelancer might resist if the feeling is not mutual, so be prepared to answer this question and try to keep the details brief.
Work on a plan for wrapping up any outstanding payments or deliverables. Express your gratitude for their work, time, and commitment, and say your goodbyes.
What You Can Control
Sometimes a contractor does not work out. Whether it was in or out of your control, you will learn through experience to handle the process better the next time.
If you came across several problems that could have been avoided through a better vetting process, cut your losses and resolve to not let that happen again. Take your time looking for a qualified freelancer, so that when it comes time to end the contract, you can be sure it’s a personal choice and not due to performance issues.
Another way to practice being proactive is to firmly lay out expectations in the beginning so you do not run into misunderstandings along the way.
If you notice any red flags during the course of your time with a freelancer, don’t ignore them. While you may not want to go through the hassle of finding another contractor, don’t keep the relationship going if you sense that something isn’t right. This will only prolong the inevitable and could make matters worse when you do decide to part ways.
The Best for Your Business
Working with freelancers is a great way for businesses to reduce costs and get quality work done quickly—all with little to no supervision from a manager. And often, freelancers are competitive and willing to go above and beyond for their clients.
No one can predict the future of your business. Reevaluating how you delegate your work is a smart habit for determining the most cost-effective way to complete tasks.
After you’ve outgrown the startup phase, staffing requirements can increase and you might have to rethink hiring freelancers. You may prefer to hire a full-time employee rather than keep a freelancer on the side. Alternatively, you could renegotiate terms such as lower rates so that your agreement better suits your needs, instead of terminating the contract with your freelancer altogether.
Whatever you decide, ensure it’s the best direction for your business and you are willing to accept the consequences, whatever they are.
Have you ever had to end a contract with a freelancer?