Hi Eric,
I am a one person, work from home firm. I have been using contractors for the last few years and it has worked extremely well. One of my collaborators is even out of state. They also work from home and may have other regular jobs. The key for me has been that I have worked with them in the past and know their talent, skills and work ethic. I know what I am going to get. I have found that we all keep untraditional hours and work in the middle of the night, weekends, etc. In the end, as long as the work gets done well and on time, it doesn’t really matter when or where it is done. I am the point of contact for the client and they have never had to question my setup.