August 5, 2016 5 min read

Opinions expressed by Entrepreneur contributors are their own.

Today, you can get almost anything you desire with the push of a button -- usually in an hour or less. From rides home to repairs to grocery delivery, "on-demand" is rapidly becoming the hottest industry out there.

Related: 5 Tips for Hiring Freelancers Who Will Boost Your Business

In fact, a recent survey found that 86.5 million Americans -- 42 percent of the adult population -- had used at least one on-demand service, and some 45 million Americans, roughly 22 percent of the adult population, had reported having worked in the growing on-demand economy.

But as more and more startups become reliant on freelancers and contract workers to deliver on-demand services, a greater number of independent contractors are starting to demand additional job benefits -- like financial security and career training -- without being stripped of the flexibility they enjoy.

So, it's probably safe to predict: As the on-demand industry moves forward, only those entrepreneurs who manage to balance contractor demands with their companies' ability to fulfill them will find the success they desire.

A case for proactive negotiation

Establishing a strong relationship with your independent contractors and keeping them engaged with the company is vital to your business’ success in today's increasingly competitive marketplace. By remaining open-minded about your contractors’ demands, you’ll be strengthening their loyalty to your company and making them more likely to stay, long-term.

Negotiating with independent contractors can also strengthen your company’s recruiting capabilities. Compensating your contractors for their time and skills will establish your company as a destination of choice for freelance employees, boosting your ability to attract the top talent.

Stocksy -- an online marketplace for stock photos -- is the perfect example of a company finding success by offering its independent contractors additional incentives. At Stocksy, each freelance photographer is given a share in the company, resulting in higher payouts for each artist. Therefore, Stocksy photographers are motivated to push the company toward greater success by continuously delivering unique, high-quality photos.

Related: Money Is Nice, But It’s Not Enough to Motivate Employees

Prepping your company to engage with today’s freelancers

Staying competitive in the on-demand economy and appealing to today’s contract workers means you must have a clear understanding of what your company has to offer. Here are four ways your company can engage with freelancers without requiring them to sacrifice the flexibility they crave:

1. Play by your market’s rules.

It’s easy for on-demand startups to run into regulatory and political problems during expansion. For example, the rules about who qualifies as an employee versus a contractor vary, and classification mistakes on your part could risk your contractors’ flexibility in the future.

Before expanding your on-demand business into new markets, do your research on that area’s labor and property regulations and policies in advance. Your prep work will save you headaches and ensure that your contractors can remain flexible.

2. Create a policy framework.

Communication is critical to any business, but it’s especially important in the on-demand economy. The most successful on-demand companies today have found that clearly communicating policies, rates and expectations is the key to keeping contractors happy, customers satisfied and business booming.

Provide your freelancers with a clear set of guidelines to help them understand what is expected of them. Whether it’s the maximum number of hours they may work as a contractor or the basic process for training, a policy guidebook will eliminate the confusion and encourage contractors to remain happily engaged with your company.

3. Provide basic labor protection.

Current labor legislation outlines the rights and benefits employers must provide to full-time employees, but there is little to no legislation covering contract workers, despite the notable growth in this area. As a result, many on-demand companies have recently faced backlash from their workers, who are demanding more recognition, coverage and protection from their employers.

Providing your contractors with basic benefits -- like a reasonable wage, job training, bonuses and paid time off -- will motivate them to work hard for your company. And it will give you a competitive edge over other on-demand companies in your industry. Determine what incentives your company can offer your freelancers; investing in them now can go a long way toward growing your business for years to come.

4. Apply key performance indicators.

While it’s important to have happy and flexible contractors, you must also ensure they’re performing well for your company. But because you’re not regularly observing them working in an office, you’ll have to establish other ways to monitor their performance.

Work with your contractors to routinely track and analyze their performance so everyone can better understand their strengths and weaknesses. Emphasize and reward ideal qualities, like initiative, self-reliance and a desire to grow. Establishing KPIs will motivate your freelancers to deliver the results they need to succeed, and help you weed out workers falling short of your company’s standards.

Related: How to Research a Business Opportunity

Right now, the possibilities of what you can get on-demand seem endless. But the industry will continue to grow only if independent contractors’ demands for engagement are acknowledged. That's why it's important to take steps to proactively negotiate with contractors, to keep them happy and your company thriving.