How Will The Gig Economy Affect your Small Business? -

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[vc_row][vc_column][vc_column_text]It’s safe to say that the “gig economy” is here, and it’s here to stay.

Cloud-based apps like Uber and AirBnB have massively disrupted once-stagnant industries around the world, and have created a shift in the way we see employment and consumption. You may have already hailed an Uber cab, or stayed in a stranger’s home thanks to AirBnB, but what does this trend mean for small business? Hilary Clinton and other politicians have referenced the economic impact of the gig economy in their political platforms, expressing excitement about building new economic activity but also concern about the impact on jobs.

To put it simply, technological advances have made it easier for freelancers to work and for businesses to hire them. Freelancing is not a new concept, but the increase in percentage of people who are working this way and the emerging technology to support this shift are impossible to ignore.

By 2020, 50% of the US economy is expected to be freelance, either by choice or necessity. John Ruffolo, CEO of OMERS Ventures, feels the number could be higher in Canada. Margo Crawford is the President and CEO of the Business Sherpa Group. She spoke recently at the Disrupt HR event in Ottawa, describing the workplace of the future.

This is a very exciting time for smaller businesses. Those who can embrace these technologies to expand their capacity and capability will not only create tremendous business value, but they have the opportunity to become leaders in their industry with a relatively small group of conventional employees. – Margo Crawford, President & CEO, Business Sherpa Group

By definition, freelancers or independent contractors are people who have engaged in supplemental, temporary, project or contract-based work. With the help of technology platforms, this on-demand workforce includes individuals, communities and teams from around the globe who are interested in working differently, or are curious about solving challenging problems.

To learn about the life of one freelancer and why she choose this arrangement, check out our blog here.

How is the freelance economy helping your business?

Access to top-notch professionals

The gig economy provides companies with access to the best and the brightest from around the world. Today’s freelancers are typically highly skilled at what they do, and have a track record and business acumen solid enough to sustain their personal businesses. Many senior executives look for balance in their lives as they mature in their careers, and are choosing to work part-time as freelancers. This means small businesses now have access to top-notch individuals, without the top-notch annual salaries.

Increases in productivity and quality

Freelancers like this model for its ability to provide balance and flexibility. They know that they are being judged on the quality of the work they do, not the time they spend at the office.

And their reputation is on the line, risking bad referrals or future work if they don’t deliver high-quality results. This combination can produce highly motivated, productive and happy workers who choose their own work schedule to meet their life needs.

Access to specialized skills

Rather than hiring a generalist to cover off many areas of the business, small companies can outsource specific functions to multiple skilled individuals for the same cost of one generalist.

While many departments – like marketing – have done this for a while, other classically in-house departments are benefiting from varied experience and specialties across the function.

Saving money and easing cash flow

Freelancers aren’t the only ones who enjoy the flexibility. Rather than hiring someone full-time, small businesses can now dial-up and dial-down key resources depending on business needs; a significant benefit to a small business’ cash flow.

It’s important to mention that while hourly rates may be higher, employers are not investing in freelancers the same way as employees.

Easier to find and manage a non-traditional workforce

Once you’ve decided to use freelancers to complement your existing team or to fill a gap in your organization, it is easier than ever to find the professionals you need. The web and social media certainly make it easier to be found, but there are also options such as joining a co-working space, or going through a consultancy to find vetted freelancers.

With an increasing number of businesses adopting this trend, it should come as no surprise that new cloud-based Freelance Management Systems (FMS) are emerging to facilitate finding and managing your freelancers in one platform. FMS systems allow businesses to manage end-to-end business workstreams efficiently: ensuring quality, managing projects and paying freelancers flexibly.

There are many online tools already on the market. While most of these focus on the US market and creative/technical projects, it’s only a matter of time before more robust offerings start to appear in Canada (some have already started to infiltrate the market, such as Toronto-based JobBliss.)

Questions to consider: are there risks?

What will be the impact on employee engagement?

The gig economy enables individuals to take ownership of their careers, they don’t rely on a company to develop it for them. This change in mindset might be affecting your employees too; your most satisfied employees may be eager to move between jobs like a freelancer.

A recent report from Mercer found that 35% of employees in Canada were actively seeking new jobs, despite being happy in their current position.

Can you trust freelancers?

It’s important to consider the implications of each role that you are freelancing and have the safeguards in place to manage the risk. Your contract with the freelancer is very important as are reference checks to ensure potential freelancers will deliver a quality product.

“Fortunately, the emerging platforms create a powerful feedback loop and rating system for both freelancers and employers. Much like the rating systems found in commerce platforms, there is motivation to deliver on promises from both sides” says Margo.

Is there a flight risk?

What happens when your freelancer is no longer available? The relationship with your freelance is flexible and they may not always be available when you need them.

Consider having a backup solution or engaging with a network of freelancers. It’s also important to consider the training time for certain roles, and to adjust the role to ensure it is well suited to be freelanced.  

Who are your brand ambassadors?

Without employees, some companies may wonder if they will loose the champions of their company and brand. After all, freelancers have their own business to promote, and won’t necessarily vouch for your company in the same ways that employees once did.

Margo says not to worry. “If you’re careful about partnering with the right people and firms, your freelancers will feel part of your team and still refer business and champion your brand in the same way your employees do.”

What will happen to company culture?

As Peter Drucker said, “culture eats strategy for breakfast”. So what happens to culture when your company is dominated by freelancers? “It can be a challenge – you need to strike a balance between allowing the independence of freelancers to thrive, but also building a sense of community and belonging that combines your in-house and virtual teams.” says Margo.

Regardless of the advantages that technology brings, humans are still tribal in nature and have a strong desire to be around others and connect, both at a personal and professional level.

Creating a culture of connecting, supporting each other and sharing ideas through robust collaboration tools and even social get-togethers will be critical to success in a more virtualized workplace.

When is your freelancer really an employee?

Revenue Canada has very specific guidelines on this subject. Make sure you are in compliance by being well informed.

Should you be hiring more freelancers? What impact will it have on your organization? “For small businesses, the ability to add critical skills and experience to the team in an amount needed to accommodate business fluctuations is critical to small business success,” says Margo.

The gig economy is a significant change in our landscape and well worth investigation to find out how it can work for you.[/vc_column_text][mk_padding_divider size=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/4″][mk_circle_image src=”” image_diameter=”300″ link=””][/vc_column][vc_column width=”3/4″][vc_column_text]

About the Author

[/vc_column_text][vc_column_text]Leslie Foley is the Marketing & Business Operations Coordinator at the Business Sherpa Group. She is an Economics graduate from Queen’s University who has built her skills through extracurricular involvements and summer internships.[/vc_column_text][/vc_column][/vc_row]