- April 17, 2018
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Did you know there are more than 53 million american freelance contractors? Wow! How can you use this resource to increase your business success? Is it possible to achieve higher profits and even explosive growth tapping into this market? You bet. First though, a bit of background. Back in the 1990’s (Seems so long ago) several pundits wrote that the economy was shifting and would shift to a free lance economy. The reason being that companies and organizations could not continue to hire full time employees at growing salary rates. In addition outsourcing was becoming very popular and has accelerated since. The logic professed that individuals would be better off in a freelance economy. Individuals could collect higher rates when spread out over a greater number of paying clients. Clients would be happy to employ contractors (1099 employees) to minimize benefits, payroll taxes, office space and other full time employee costs. Many times business owners just don’t need a full time employee when testing or starting something new.
Fast forward to today and the internet has allowed outsourcing to go global. Couple low cost labor rates from third world countries with the great recession and there are unprecedented inflows to the freelance economy. Approximately 7.5MM jobs were lost in the great recession. Fifty percent were middle management jobs. Since that time hiring has increased but on average only 2% of the new opportunities are in the #0K to 50K middle management salary range. The middle manager is under attack by both outsourcing and technology. Many of the disenfranchised decided to hang out their own shingle in the freelance world as business owners.
The final outcome is still to be determined but there are many positives. The freelance industry often has lower fixed costs with many tax write-offs. Home based businesses write off real estate and utilities. These would ordinarily be living expenses paid out of taxable earnings. Income needs drop accordingly. Automobile and transportation expenses follow suit at an even higher tax deduction. Traditional Healthcare benefits can now be accommodated via ObamaCare. Individuals no longer need to be dependent on “The Company” for healthcare, 401K or pension benefits. It’s very possible to maintain a standard of living at a lower rate because the tax base drops significantly. In addition Entrepreneurs are capable of growing revenue without the limit of corporate or employee salaries caps. Understanding the sales and marketing process becomes the key to business success, explosive growth and significantly higher profits.
As a business owners you can now acquire talent at varying levels on an as needed basis. BTW all these freelance contractors are business owners. Full time employees are no longer needed to satisfy business demands. Marketing, design, IT, payroll, HR, bookkeeping and just about anything else you can think of including rental CEO’s and CFO’s are now available in the marketplace at far less than full time employee costs. The owner spends less, the freelance contractor needs less. It’s a win-win. High quality management of diverse talent sources becomes more becomnes the key to business success, explosive growth and higher profits. Communication skills, planning and collaboration are the cornerstones of the new freelance economy. Managing and participating in collaborative teams becomes the “X” factor. Learning to operate without geographic boundaries becomes the norm. Project Management, planning, scheduling and change management along with remote cloud based or remote reporting systems and skills are needed to incorporate the new foundation. Communication is paramount. On the flip side, the business owner, no longer has the authority option for performance and motivation. Holding a “do it now or your fired” gun to the freelance contractor is just not effective. In fact, many freelance contractors willingly fire their clients for bad behavior. On the flip side freelance contractors must be able to deliver exceptional customer service to retain their key customers. Training and education maintenance fall on the shoulders of the freelance contractor. Excuses and bad behavior go out the window.
Advertising for and purchasing freelance services becomes the new HR model. Online marketing databases like Craig’s list are mined for talent. Online recruiting and Social Media platforms are the new tools to reach the freelance community. Creating the value proposition isn’t just for selling products and services. Business owners need to sell the team and the opportunity in order to attract top talent. In the freelance economy, it’ not just money that motivates. Time will tell but it appears that those who learn to operate effectively in the new economy have every opportunity for greater business success, explosive growth and higher profits.
BusinessWhitt is a professional coaching and training practice located in Costa Mesa CA. Project Management, CRM, Finance systems and communication processes incorporating the freelance economy are key deliverables for our clients. Helping our clients get where they want to go faster is our goal.
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