Philip Hammond eyes £1bn budget raid on freelancers – @TheSundayTimes

The Sunday Times reports that the Chancellor is considering another attack on sovereign professionals. The concern seems to be, as before, “disguised employment” and the Sunday Times’ coverage is couched in terms of “levelling the playing field” and “significant tax advantages”.

The reality of course is different.

When running properly, individuals operating through personal services companies are each individual businesses carrying all the risks of business and not enjoying the corporate comfort blanket benefits of traditional employment. If the cost to the client company is higher than employing a traditional employee (and often the fully loaded costs are not as far apart as crude comparisons of “day rates” suggest), then the client business benefits from flexibility and agility that no commitment, on-demand services provide.

A tax raid risks damaging the supply of this important flexibility while also increasing the cost to client firms. This has already been seen in the public sector where restrictions similar to those imagined here have already been implemented. It’s a short-sighted and ill-considered move.

Does “disguised employment” actually exist? I’m sure it does. A number of recent court cases suggest that there has been a trend for some employers to seek the cost benefits of using freelance contractors whilst retaining all of the control traditionally associated with  “permanent” employment. Those cases should rightly be pursued, but not by painting the self-employed as either downtrodden, abused workers or system-abusing fat cats.

Being a sovereign professional is a choice. It has real benefits – not least in flexibility – but it comes with risks, costs and responsibilities. A suitable test of employment would investigate the extent to which those risks are real, rather than simply punishing providers of needed skills through a flexible model.

 

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Sophocles, Cialdini and reciprocity

Execupundit Michael Wade reminds us of a quote from Sophocles:

Kindness begets kindness.

…which maybe sounds a little platitudinous, until you realise it is at the heart of Robert Cialdini’s first Principle of Influence: Reciprocity.

Too often, we think of reciprocity as something transactional but, in reality, it needs to be a longer term, less expectant behaviour. “Kindness” is not far off.

I was reminded of this listening to Jason Sibley (@JasonCreation) of The Creation Agency at Marketo’s Marketing Nation event, last week.

Here’s a useful reminder of all six principles from Cialdini’s site:

 

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You have the power

Callie Oettinger on StevenPressfield.com talks about the highs and lows of the independent creative. Also, the need to fight:

Be prepared to fight today. Be prepared to fight tomorrow. Be prepared to fight every day that follows.

And if you cross paths with a rabid wolf, don’t let it steal your soul.

Hold on tight and fight.

Fight for your ideas.

Fight for your work.

Fight for your mind.

Fight for your body.

Fight for everything you hold dear.

Sage advice.

 

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Living in a shepherd’s hut – @thisisseth

More pithy, sage advice from Seth Godin:

The best way to plan a house on a vacant piece of land is to move into a tiny shepherd’s hut on a corner of the property. It’s not fancy, and it’s not comfortable, but you can probably stay there for a week or two.

And during that week, you’ll understand more about the land than you ever could in an hour of walking around. You’ll see how the rain falls and the sun shines and the puddles form.

As you’ve probably guessed…

The rest, here.

 

Photo by Sam Carter on Unsplash

Lending and the gig economy

On EconomicVoice.com, the University of Edinburgh Business School’s Jonathan Crook highlights the risk to sovereign professionals caused by the misalignment between traditional lending and the gig economy.

As Crook observes:

while this in-the-moment working arrangement can be sustained in the short-term, only thinking about the now may lead to long-term financial issues.

because:

For years, traditional lending has focused on assessing stable consumer income to determine financial risk. Those with full time and stable jobs will fare better. But ‘gig economy’ workers clock up individual hours which – from a credit risk modelling perspective – may not be seen as joined up, consistent or predictable.

It’s an age-old problem. While the freelance / gig / sovereign professional economy has boomed in recent years, overly conservative bank, stuck to their risk-averse playbooks, have failed to move with the times.

Daniel Pink highlighted the problem in his book Free Agent Nation way back in 2001.

However, in many ways, the security of “”full time and stable jobs” is an illusion. An employee who loses their job has no network or process to fall back on. If a freelancer with a portfolio of clients loses a client, he or she has a basket of other clients to fall back on; the risk is spread. And, if the sovereign professional is an interim manager or “super-temp” they have an established network of agency relationships to help them towards the next project.

There is a clear market need for a solution. Crook suggests that:

it is possible some agile lenders will see this as an opportunity. Instead of examining the consistent hours an employee works, it’s not inconceivable to think they may begin tracking how many years someone has worked in this way and the overall hours they’ve been paid for.

Pink’s solution, at least at the higher earning / larger lending end of the scale was the issuing of shares or bonds, citing examples like Bowie Bonds and the fact that boxers (amongst other athletes) fund their own training by selling shares in “themselves”.

Whichever way it goes, the lending market needs to adapt and, in all likelihood, the solution won’t come from traditional banks at all. A player like PayPal – who have already disrupted small-business funding with their  PayPal Working Capital product – will take a sensible, reality-based view that recognises that a sovereign professional’s established free cash flows are at least as secure as the historic wages of an employee.

(Disclosure: PayPal is a client of my business, Burning Pine)

 

Photo by Tim Evans on Unsplash