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7 Aspects of the Gig Economy

Michael Houlihan & Bonnie Harvey — Thu, 23 Nov 2017 18:00:45 +0000

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.

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.
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.
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.
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.
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.
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.
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!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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When Can I Quit My Day Job?

Michael Houlihan & Bonnie Harvey — Thu, 17 Aug 2017 17:00:39 +0000

Whether you are thinking about starting your business, you have already taken the plunge but are still pre-revenue, or your new business, struggling to make ends meet, one of the most important questions you need an answer to is, “When can I quit my job?”

You know that the time devoted to your job is taking you away from the attention your startup needs. The longer you keep your job, the longer it takes your startup to achieve positive cash flow. On the other hand, you need the income from your job just to cover food, clothing and shelter, never mind the capital that is required for the startup itself. It’s quite a dilemma.

But let’s look at it from another angle and perhaps the right answer will become clear. For one thing, when you quit is not a date. It’s a series of metrics. So, let’s rephrase the question(s) based on those metrics:

How many loyal customers do I need?
How much do I need to sell each of them to pay my bills for three months minimum?

These are sales-based questions and should be the primary indicators of when you can afford to quit your job.

Many startups, unfortunately, rely on the same “hockey stick” sale projections they used in their business plan – developed before they actually got into the nitty gritty of sales. Did it take into account the cost of sales (i.e., the expense of making sales happen and the costs of servicing what you sell)? Many regret quitting their jobs before they found out it’s the cash flow projection, and not the business plan, that indicates their business’s sustainability.

You might say, “I’ll just borrow the funds to start my business,” or “I’ll just sell some of my equity to some investors,” or even, “My partner will keep working while I start the business.” Any of these might lead you to believe you don’t need to think about continued sales from loyal customers before you get started. But you do! Once you burn through your funds on research and overhead, you’ll have to go back and beg for more. Only this time, without adequate sales, your investors are much less likely give you more money to “burn.” And that’s when you wish you hadn’t quit your job quite that early in the game.

The fact is, you need to have funds on hand to cover at least three months’ worth of expenses before you even think about quitting your job. You cannot rely on all your funds coming solely from sales.

This means that before you even start, you have to identify the “low hanging fruit.” These are the customers that you have presold on your idea. They have made at least a verbal commitment to buy your products. More importantly, you have learned exactly how they want to buy your products and for how much.

Whether you get the three months’ worth of funding from savings, trades, prepays, loans, investors, your partner, or a combination, you still have to establish an early sales pipeline. Even if your investors are so enamored with your idea that they themselves assume smooth sailing on the revenue side, for your own sake you had better make this job #1.

Once you quit your job, there’s usually no going back. And even if you do everything right and establish a sales pipeline that will cover your bills, starting a business is still a big risk. So, as Clint Eastwood said in his 1971 classic movie, Dirty Harry, “Are ya feelin’ lucky?” You will feel a lot more “lucky” if you have the customers before you quit your job!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post When Can I Quit My Day Job? appeared first on The Barefoot Spirit.