How Alodis are reformatting the world to make it friendlier for self-employed professionals
Reformatting the World
How will we work in the UK in 2010? Mike Croft, CEO of Mongrel, thinks he knows. Mongrel is the new company behind Alodis, an organisation that combines aspects of a trade union, a professional body, a media company and a business. He forecasts an “economic time bomb” as millions of conventional jobs disappear[i]. The good news is “a large and positive movement away from dependency on employers,” as the number of self-employed people increases dramatically over the next ten years, from 2.6m to as many as 3.5m[ii] and with that growth the number of self-employed professionals (SEPs) rises from 1.7m today to 2.3m[iii]. It is for this group of self-managed, one-person businesses that Alodis has been created. Patricia Hewitt said in March this year that small businesses, including SEPs “will be the main drivers of economic growth, product innovation and job creation in the UK”, underlining the importance of this group.[iv] “Alodis is about reformatting the world to make it better for SEPs,” argues Croft.
Who are they are?
A self-employed professional is a one-person business. It is a mistake to assume that it is a stepping-stone to becoming a small business with employees, although some do. The important distinction is that they manage their own work and usually provide their labour on a project basis. This is unlike someone in a conventional job who lets his employer set their working hours, sort out their tax, manage their cash flow and cover for their holidays. Who are the people that make this choice? According to the government, of 28.2m people in work, 3.2m are self-employed[v]. Of these, 2.6m were one-man-bands[vi] and of these, 1.7m are in the ABC1 socio-economic category[vii], i.e. self-employed professionals. According to a MORI poll commissioned by Alodis[viii], three-quarters are male and most of them work in business advice, design, journalism, legal or financial, education or training and the performing arts. Between them, they create £65bn in revenues each year[ix].
Why do they do it?
What makes someone give up a well-paid and comfortable job? Of course, for many the answer is getting the sack. According to the same MORI poll this was true for 16% of respondents. 9% did so to look after children. Many had had an ambition to be self-employed for a long time (16%). These are the answers that most people would have expected. A surprisingly honest explanation is that 36% wanted to make more money. Dig a bit deeper and you find that a lot of SEPs are reacting against working life in a big company. People dislike office politics, the way they are managed, not getting the promotion they wanted, stress, working hours, commuting and the lack of challenge. Underlying this is a breakdown in the old notion of a professional career and a job for life – you gave up some freedom and put up with some pain in return for career progression and job security. These were inventions of the late nineteenth and early twentieth century middle class and for about seventy years white collar workers thought of their working life in this way. Only in the last few decades have these notions eroded. Unemployment, downsizing, internationalisation and the automation of white-collar jobs have all contributed to this trend. But it hasn’t all been forced on people. Increasing levels of higher education and social mobility in the last forty years have produced several generations for whom it is important to do work that was in tune with their beliefs and which harnessed their creativity and imagination. People don’t want to work in jobs that are boring, demeaning or which compromise them. Or, more bluntly, as one interviewee said: “at least now I get to work for a boss I respect.”
From the employer’s perspective there has been a quest for efficiency, driven by competition and the search for greater profits. Companies have been busily automating their systems and outsourcing non-key activities. An example of professional job loss through automation is in the retail banking sector where the number of people employed by banks fell from just over 450,000 in 1989 to about 375,000 five years later.[x] Data from the University of the West of England suggests that 90% of firms sub-contract one or more services and 44% use fixed term contract employees and 13% use freelance workers[xi]. This reduces the number of jobs in traditional companies but also provides opportunities for newly liberated SEPs.
A recent TUC Report entitled “End to Burnout Britain”[xii] bears out the negative employee experience. It notes that only half of employees surveyed thought that their job was enjoyable and fulfilling and only 40% believed that they were always on top of what they had to do. The report also says that people in the UK work longer hours than in any other EU country, averaging 43.6 hours a week, with this burden falling disproportionately on managers and professionals[xiii]. Finally, the report also bears out the sense that Britons are badly managed. 26% of the labour force (that’s six million workers) say their boss doesn’t know how to get the best out of them and that their bosses are so overworked they don’t really have time to manage the work of their staff properly. As the old joke goes: “since becoming self-employed I’ve had to work twenty-four hours a day, but now I get to choose which twenty-four.”
The Independence Revolution
Just as individuals have chosen autonomy, the whole community is ready to sign a declaration of independence. Business guru Tom Peters has championed his vision of a future for independent workers in his Work Matters Manifesto[xiv]. He argues that the “the message in a nutshell: 1) You, me, all of us, must turn ourselves into distinctive one-person Brands; 2) the professional service firm — with its obsession on clients and projects — must be the new organizational model; 3) tasks must be turned into WOW! Projects.” US magazine Fast Company has achieved a paid circulation of 680,000 with a message of business revolution based on people and, in part, an agenda of ‘Go Solo.’ Numerous B2B sites, such as SmartEric.com, Inconet.com, Swiftwork.com and freelancers.net, have sprung up to match ‘e-lancers’ with companies who need their services. Besides Alodis, a number of organisations such as Elancentric and the Federation of Small Businesses are trying to support the independent worker community. The trend has also been recognised by recruitment agencies and many of them have set up businesses to handle professionals working on temporary contracts, for instance in the area of interim management. More tangible evidence in the UK is the rapid rise in Alodis’s membership to over 50,000 since its inception in March 2001[xv].
Alodis was amongst the first in the UK to spot this trend, buried in the mass of employment statistics, and recognised the opportunity it represented. Their mission is three-fold: first, to coalesce the SEP community by providing a forum and a collective voice; second, to act as a trusted source of information and advice and third, to provide highly targeted commercial services and products to the community. Alodis is, in effect, a for-profit professional body representing and supporting self-employed professionals.
There is no doubt about the need for such an organisation. The MORI poll showed that 62% of SEPs want a representative voice to speak for them and the vast majority feel unsupported by government and banks.[xvi]. Issues like IR35 show that government doesn’t understand the challenges faced by SEPs, even while they proclaim their importance. Mike Croft: “our role is to get government to start treating these people as heroes and the only real, believable alternative to mass unemployment.” Similarly, Croft says, SEPs need a voice to represent them to big businesses. He cites the difficulty that self-employed people have in getting mortgages because they are “sub-prime” and cannot produce an employer’s reference and a series of pay slips. The painful irony is that someone with a ‘regular’ job may well have less security of income than a successful SEP, but they get preferential treatment and lower interest rates from many mortgage lenders.
The advice and information aspect of Alodis is best represented by their eponymous magazine and their website, featuring expert advice and news specially targeted to the SEP audience.
On the commercial side, Alodis will provide products on its own account, acting to some extent as a surrogate employer by providing things like its PA service, for a profit, but Croft places great store in the concept of reverse marketing. From a marketer’s point of view, Alodis offers access to a large and growing ABC1 market with “zero wastage against a very narrow profile”. His intention is to “go beyond content to fulfilment,” marking a “transformation from an information brand to a service brand.” Done properly, it is advertising with a real benefit for the audience and for the advertiser. Alodis can go to third-party businesses and say: “this is the product or service that our audience is looking for.” As well as better meeting the needs of Alodis members, they can also achieve economies of scale by aggregating their purchasing power and cutting out the retail middleman. End result: Alodis makes money, Alodis members get good-value, specially tailored products and the manufacturer increases their profits.
Challenges and Opportunities
There is a range of challenges facing the SEP community and which provide opportunities for Alodis to help:
- Help members to deal with the regulatory burdens (VAT, tax, health and safety etc.) that they face as well as lobbying government to reduce and more carefully target them for SEPs.
- Advising members and providing practical tools and services to help with aspects of running a business such as book keeping, marketing, credit control, secretarial support.
- Aggregating the group’s buying power to secure the same kinds of discounts that a single business employing 1.7m people might get. For example, car prices at fleet rate rates or computers with free 24/7 telephone support.
- Rewiring society and government to treat SEPs as an important and respected part of the economy, in their own right and not as seedling SMEs.
- Encouraging the creation of communication technology to allow collaboration of SEPs in large groups to provide temporary virtual teams to businesses.
- Providing a trusted market place where buyers and sellers of SEP services can meet and do business.
- Research into and support for activities that increase the number of people who are able to participate in the SEP economy but who are presently excluded through lack of training, financial support, or disability.
- Lobbying for changes in the educational system to train youngsters in the skills they will need to be self-employed.
- Helping SEPs to think about their careers and plan them effectively, including training and development.
- Exploring ways to better integrate the SEP community into the wider economy. The relationship between SEPs and other businesses needs to go beyond mere contracts and invoices. There needs to be a set of mutually understood ground rules and expectations and a mutual respect. To some extent, this requires finding ways to establish social and professional standing for SEPs, perhaps through a professional body with entry qualifications.
- Assistance with SEP financial planning, such as pensions, insurance and healthcare, that takes their special needs into account.
- Addressing problems of isolation that may occur. A TUC report entitled “Teleworking – the new industrial revolution,” which admittedly deals with employees working from home rather than self-employed professionals raises the point that “telework [isn’t] always the liberating experience even for well paid professionals and managers – the telework experience can also be one of social isolation, increased stress, and an extension of the long hours culture.”[xvii]
There is no question that a revolution is occurring which is increasing the number of self-employed professionals in the economy and that this revolution is paralleled by moves to build communities for them and to give their way of working an intellectual framework. Numbers of SEPs may not increase as rapidly as Alodis expect in their most optimistic forecasts, but even today they represent 6%[xviii] of the workforce. This is a substantial body of well-educated, independent-minded people who can, and should, work together in pursuit of their own self-interest and also to explain and enhance their role in the wider economy. Alodis’s challenges lie: first, in finding enough common ground between them all so as to capture the maximum number in its orbit; second in delivering the representation, advice, information they need and selling services they want and doing so at a profit; and thirdly reconciling the conflicts of interest inherent in combining both commercial and representative functions. If it can succeed in all three areas, Alodis could become standard-bearer and business intermediary for one of the largest and most economically important groups in society and, at the same time, providing members with a very valuable service. It’s a tantalising prospect. – Matthew Stibbe, August 2001
Case Study One: Simon McNeil-Ritchie, Hamilton Laird Consulting Limited
I became self-employed in 1998. For the previous 14 years, I had been a British diplomat and served in our Embassy in Japan between 1987-91. By then, I was in my mid-30s and I recognised that I either served out the rest of my career in the Diplomatic Service, or made the break. If I’m honest, I had also come to the conclusion that I was increasingly ill suited to being a mid-manager.
Hamilton Laird works with start-up and small businesses to develop their strategies, prepare their business plans and financial forecasts, and to boost their marketing effort. Increasingly, we can help them raise finance through our network of contacts in the venture capital and business angel communities.
I think it is important to distinguish between the challenges and problems that face most start-up businesses and those peculiar to self-employed professionals. The latter have to cope with the usual issues of generating versus fulfilling business, regulation, etc, but they can also suffer from a lack of motivation/discipline, loneliness and a loss of status. Perhaps I’ve been lucky. I love the freedom, the sense of opportunity around every corner. Above all, I have met and worked with a great many first-rate people, who care passionately about what they are doing.
For the self-employed professional one of the greatest challenges is making time for one’s own training. I know some who find it hard to make the time to keep their professional skills and knowledge up-to-date. Another problem is funding. Too many of those who made a killing during the dot.com bubble have since turned their backs on start-up businesses. Certainly, a few of the entrepreneurs who benefited briefly deserved their come-uppance. But many small businesses that fail don’t deserve to. If they received the right support, when they needed it, more of them wouldn’t.
Case Study Two: Simon Raistrick, feelmedia
I set up feelmedia in Feb 2001, when I left my job as head of project management in a web consultancy. It’s something I’ve wanted to do for the last 5 years and had been building up experience until I had enough confidence in my abilities to go for it.
Feelmedia provides user-focussed solutions for digital media. Our user experience and information architecture consultancy operates on a single project or cross-project level to enable organisations to produce user-focused digital media products. Our main markets are web and computer game production houses, and the main problem we solve is bad user experience.
Apart from the expected tax and infrastructure hassles, I’ve found it amazingly difficult to find the right people in target companies who will understand the value of feelmedia’s work as well as having the influence to buy our services. Even in some high profile companies, there seems to be an amazing lack of awareness of some of the core principles behind a quality web presence.
I think my greatest achievement was doing the overall information architecture strategies and principles for the forthcoming BT Investor centre for Pauffley, a big web agency. The current site won the Investor Relations Website award 2001, so I’m excited to see the new site when it’s launched – I’m sure the final version will be something to be very proud of.
I love almost everything else about being self employed – doing what I love the most and getting paid for it, going mountain biking for half an hour when my head needs clearing, assigning training as a necessary pursuit, setting up my computer exactly as I want it and focusing the business offering to match my exact personal strengths – an offering which does not exist elsewhere.
I would like to see someone providing information about the effects of government actions on the self-employed, to raise awareness and build a community (such as ‘Rising to the Challenges’ in the June issue), and then lobbying for change. I would also like to see a push for a single point of government contact for self-employed people during their first year of incorporation, to whom all details of tax etc can be sent, to avoid the self employed person becoming the agent for providing communication between government departments who really should be talking to each other but currently don’t seem to.
Copyright (c) 2001 Financial Dynamics. All rights reserved. Article reproduced by permission.
[i] Interview with Mike Croft, Mongrel on 26th June
[ii] Telephone interview with Yvonne Piper on 3rd August, originally figures from Foresight report (www.foresight.gov.uk) and quoted in DTI Press Release (http://www.nds.coi.gov.uk/coi/coipress.nsf/2b45e1e3ffe090ac802567350059d840/0672caf21720e1f880256a1800577548?OpenDocument) “The Foresight report predicts a significant increase in the number of SMEs over the next 10 years. By 2010 there will be over 4.5million SMEs and perhaps as many as 5m, up from 3.7million today.
[iii] Today’s figure of 1.7m is derived from the number of ABC1 self-employed professionals reported in TGI (Target Group Index) from the BMRB (British Market Research Bureau) from October 1999 to September 2000. According to the Government Small Business Service (http://www.sbs.gov.uk/press/news44.pdf) “Of the 3.7 million businesses trading at the start of 2000, nearly 2.6 million were sole proprietorships and partnerships comprising only the self-employed owner-manager(s), and companies comprising only an employee director. Only 1.1 million enterprises were employers.” The Foresight report (ibid.) anticipates that the maximum number of SMEs in 2010 will be 5m and by applying todays ratio between SMEs and SEPs (3.7m : 1.7M) to 5m SMEs in 2010, I derive an estimate of 2.3m SEPs.
[iv] See Foresight report and DTI Press Release cited above
[v] National Statistics Office Labour Market Statistics July 2001 (http://www.statistics.gov.uk/pdfdir/lmsuk0701.pdf) Section 3: Employment 28.2m people in work (including 153k in government schemes and 97k unpaid family workers) of whom 24.8m are employees and 3.2m are self-employed.
[vi] Small Business Service ibid.
[vii] TGI demographics (see note above)
[viii] MORI Poll data summarised in Alodis spreadsheet SEP Facts(12.0)2.xls
[xiii] Labour Force Survey, Spring 2000 cited in the above report.
[xv] “Mongrel launched Alodis for self-employed professionals in March 2001 and by the beginning of June 2001 its membership had reached over 50,000.” Mongrel Website (http://www.mongrel.com/ se_alodis.html)
[xvii] TUC Report: “Future of Work. Teleworking – the new industrial revolution?” published 3rd August 2001. http://www.tuc.org.uk/work_life/tuc-3504-f0.cfm
[xviii] 1.73m SEPs (see notes above) out of a working population of 28.2m; rising to 2.3m in ten years out of the same working population (which is, in fact, likely to shrink because of general demographic trends).