7 Aspects of the Gig Economy

Most startups fail because they have too much overhead and not enough sales – period! In fact, in The Barefoot Startup, we advise our clients to outsource everything but sales, accounting, and quality control. Overhead expenses are earned by sales, not the other way around!

We recently had the pleasure of attending the Conference on The Gig Economy hosted by the San Francisco Chapter of the Global Chamber of Commerce. The Chamber is keen on keeping their members abreast of the latest developments in the international trade space.

When you think of gig work, names like Lyft and Uber naturally come to mind with all their legal issues that continue to unfold. The conference did a great job of exploring those issues and the ramifications to its members and attendees.

What we enjoyed the most was the first panel discussion that included leaders from government and industry, large and small, who focused on their experience with contingency, or “gig” workers. It was an eyeopener and has special significance for startups looking to reduce their need for capital to cover overhead by outsourcing certain kinds of work. The panel thoughtfully examined several aspects of gig work and the implications businesses should be aware of.

1. Batch Work. Because these folks are working on a temporary basis, it’s best to give them work that has a beginning, a middle, and an end. Be clear about the parameters, deadlines, and formats.
2. Free Agents. Since they work for many clients, they have to shuffle priorities. Make sure your work is on their priority list. Also, be aware that you can lose them after you have invested training time.
3. Timing. They may work in different time zones making real time communication difficult. They may choose to work when they want. You may have to accommodate their existing schedules to get your job done.
4. Legalities. There appears to be a fine line between independent contractors and full-time employees. It’s still being adjudicated all over the world. Different countries have different laws one must be aware of. Generally, the more restraints you put on gig workers, the more likely they are to be considered employees. For those who are employees, the governing bodies want insurance, and taxes and employer contributions – and the battle goes on in each jurisdiction.
5. Up-To-Date. Gig workers tend to be more current on their job skills and stay on top of the latest unfolding technology, even more so than your own employees who, over time, may become lax in updating their education.
6. Cultural Impact. Contingency workers tend to work harder and faster than many of your own people. This tends to influence your folks to work harder. But on the other hand, gig workers can lack an understanding and appreciation for your company culture, policies, and procedures. They can be out of step with your people. Especially if they are working directly with your employees, this can be a problem.
7. Proving Ground. Many companies use a gig worker for a trial period to see if they will fit into their company as a full-time employee. It’s also a way of securing trained folks and their knowledge of your company without having to first make them an employee. This way, you get a sample of their work without a commitment.

What we like about the gig economy is that, especially for cash strapped startups, it can be an excellent way of paying for work as needed and not having to support a “payroll” that is due every two weeks whether or not you have made sales!

We advise our clients to look for the types of work that “fit” the Global Gig Economy. Be aware of the shortcomings as well as the advantages. It just may be the outsource resource you’ve been looking for!