Marketlend Academy: Five Reasons To Utilise The Gig Economy For Your Small Business
What do you know about the gig economy? How an employer manages their growing small business has changed immensely in the last 10 years, with both employees and employers alike now relying on the flexible and cost effective nature the gig economy presents.
The gig economy refers to the segment of the workforce that relies on freelance and independently contracted jobs. The rise of the gig economy isn’t something necessarily new, but with the growing incentives of flexibility and entrepreneurship, it has seen a steady implementation into the workforce, and now even small businesses.
With the gig economy becoming a growing trend globally, its important to understand why it can be a benefit for your small business. Here are five reasons to utilize the gig economy for your small business, unlocking your businesses potential:
Creating A Collaborative And Healthy Environment
Would you believe people work more efficient and effective when they’re happy? Well statistics have shown that members of the gig economy are so happy with the results of this particular workforce, that 90% plan to continue their professional careers remotely via independently contracted work or freelancing.
Where independently contracted work or freelancing doesn’t necessarily give the traditional comfort and security of a part-time or full-time job, it has empowered and enabled freelancers to create and negotiate their own flexible schedules, as well as crutch on the comfort of working from home. The ability for contracted workers to benefit from their environment at home, while being transparent and fulfilling their work with their employer, can lead to a partnership that is equally beneficial for your small business.
Short term solution without long term consequences financially
Your small business will benefit from using independently contracted or freelance workers for the simple reason that you’re not taking on a long term financial obligation. Having more space in your pocket will be important for your small business, and hiring part-time or full-time employees can bring on burdens of their own. With the flexibility gig economy work presents for your small business, it’s necessary to pinpoint early on when creating your small business what work can be done remotely, and what needs to be done in house.
Technology
The gig economy and technology are converging at a growing rate. With the outsourcing of technological work becoming one of the thriving workforces within the gig economy, it’s no secret why: With the always growing network of computing, communication and technology, it’s important to understand the technological resources you must utilize to protect and strengthen your small business.
From anti-hacking software to creating employee time-cards online, many aspects of keeping and protecting a growing small business refrain back to technological work, so utilizing independent contractors who can maintain and sustain the technological needs of your small business will be important.
Productive and Creative Work
One of the more basic elements of understanding the importance of the gig economy to independently contracted workers or freelancers is the very basic principle that it allows workers to be both productive and creative. With the support and transparent relationship you’ve built with your independently contracted worker or freelancer, you have shown your trust in them to fulfill and meet your businesses expectations, while giving them the comfort and stability of working remotely. From these expectations will come contracted devotion and mutual respect from your independently contracted worker, understanding the benefit and privilege of working from home.
Less Maintenance
When you hire through the gig economy, you ensure yourself less daily maintenance at your small business. With this in mind, it’s important to understand the benefit less maintenance has on you as the overseer of your business and it’s employees. Having work done from remote locations can create an environment in which you are able to maintain your workplace with a little more ease due to less visual obligations.
The gig economy is not perfect. From less security for employees to less stability for employers, it can have its negative effects if relationships and partnerships aren’t monitored and maintained properly.
Workplace dynamics have been historically unpleasing for employees, and the rise of the gig economy can be attributed in some instances to the perceived perils of the traditional workplace. There are many reasons to utilize the gig economy, from the environment it creates for you as an employer, to the flexibility it creates for your employees.
Marketlend Academy: The Value of Insured Loans
Insured loans can bring real peace of mind to investors because insuring a loan brings protection in the face of often unforseen events that prevent the repayment of that loan. How do insured loans work? First, insured loans need a pioneering platform to realise their potential, one that is built on best practice, transparency and flexibility.
Marketlend’s proven first-of-its-kind borrower and loan risk assessment systems are supported by carefully structured insurance (in certain circumstances) and loss protection policies.
What does insurance cover?
- Payment on insolvency
- Repayment of Principal Advanced.
- Collection Costs
- Legal Costs
You can learn more about the model here, and we will also be developing more insured loan material for Marketlend Academy in the days ahead. But we want to share a recent experience that drives home the value of insured loans. The experience is best recounted in the words of our founder and CEO, Leo Tyndall, in the following excerpted from a message to investors. His communication underscores how Marketlend’s robust model supports both investor interests and the health and vibrancy of SMEs.
“I think it is important to share the following with you as a member of our community of investors. In further confirmation of the strength of Marketlend’s unique model, all investors involved in a recent liquidation have now been repaid their principal as a result of the successful approval of the claim on the trade credit insurer. This positive outcome shows how trade credit insurance gives investors a proven safety net. It also shows the value of the innovative structures we have in place that make our pioneering platform robust, transparent and investor-friendly.
This outcome also underscores a critical aspect of all business lending that no investor should ever overlook: no matter how you may scrutinise the financials of an entity, ultimately the unforeseen can undermine an investment despite how seemingly sound it is.
Adding the additional layer of trade credit insurance not only supplies the safety net that worked so well in this instance, but also provides another independent level of scrutiny since the insurer itself is also involved in assessing the financial strength of the company.
Thank you.”
— Leo Tyndal, CEO and Founder, Marketlend
Marketlend Academy: How do you hire a bookkeeper?
When starting a small business, the list of important financial decisions that go into the development of your newly formed enterprise can be overwhelming. From establishing an office to paying employees, the finances and expenses can pile up.
With this in mind, it’s important to hire a bookkeeper who can help sort out the money side of the business and establish good professional record-keeping, freeing you to focus on the other critical tasks involved in getting your newly formed business up and running smoothly.
Bringing someone on board to manage the financial matters may seem a significant expense in the short term, but it can save you time and money in the long run.
When hiring a bookkeeper for your small business, you’ll want to follow these fundamental steps:
- Decide if you need an employee, firm or consultant
Do you want your bookkeeper to be an employee? Would you prefer to work with a bookkeeping firm? Or would an independent consultant on contract be a better option? Much depends here on the size of your business and the size of your budget. If your business is big enough, with daily accounting needs, a staff position might be the best way to go. For smaller businesses, a firm or consultant might be a less costly and perfectly effective choice. Either way, make sure you don’t underestimate the importance of good record-keeping from the start.
- Look for someone that understands your business
When hiring a bookkeeper, you’ll want to find a firm or consultant that is experienced in working within your specific industry. For example, if you’re starting a restaurant or eatery, look for someone established in the industry who has handled the bookkeeping for food establishments in the past.
- Find a bookkeeper with computational knowledge
You don’t need a computer wizard as your bookkeeper, but with the growing use of online accounting software it’s important to hire a bookkeeper who is up to date with the growing technological tools that have expanded their work. This is a benefit for you and your business because the bookkeeper will be able to utilize the technology that enables them to be transparent while delivering data-based analysis of your business to you.
- Know the bookkeeper’s track record
You’re giving your bookkeeper responsibilities essential to managing your company’s finances which include proprietary information. Make sure this individual or company has a proven track record. Reach out to former clientele. Check references. Do a criminal background check. Excellent references that demonstrate your candidate’s experience, honesty and reliability are a safeguard against a poor hire that can affect your company’s bottom line.
- Decide whether you need an accountant as well
A bookkeeper will help with the day-to-day tasks of managing and recording company expenses, from payroll to purchasing. An accountant will go further and provide big picture financial analysis of your company and tax filing. Understanding the difference between a bookkeeper and an accountant is important for your new business, with both potentially playing a vital role to any growing startup. From the daily operations standpoint, a bookkeeper is the wise starting point. But as your business grows, you may find the services of an accountant invaluable.
Marketlend Academy: 5 mistakes business owners make when trying to get finance
This week, we have the pleasure of again welcoming Bessie Hassan. As the Money Expert for finder.com.au – the site that compares virtually everything – Bessie is an experienced commentator who often appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. Bessie is passionate about empowering Australians to make better decisions, whatever it is they’re looking for.
As the saying goes, you need to spend money to make money – a phrase that many business owners can relate to. Most businesses will need a little help with capital at some stage of their business life cycle, which is where financing steps in.
There’s a lot to think about when seeking business finance, which means mistakes are easily made. We’ve listed five common mistakes that business owners make – so you can avoid making them yourself!
1. Not keeping financial records up to date
For a lender to determine your risk profile when providing finance to your business, they’re going to need to take a look at your books. You’ll need to hand over copies of financial statements including your business activity statement (BAS), profit and loss statement (P&L) and balance sheet for the last three years. If your accounts are messy and not updated then the lender has no way of knowing your financial position and therefore your ability to meet repayments.
If you can’t do this on your own, hire an accountant to help you out. Knowing your finances inside out will show the lender that you’re serious about your business and are confident in its prospect of success – which will give the lender confidence too!
2. Not writing a business plan
Your reason for borrowing funds should align with your long-term business goals. Putting your vision for your business into writing makes it easier for you to share and communicate information about your product or service, strategy and financials. This information can help the lender to understand why you need the money and how long it might take you to repay it. Incorporating cash flow projections into your business plan to show how the loan will be used to generate income can help to convince lenders that you’re a safe borrower. Don’t forget to be honest and accurately estimate your cash flow to account for busy and slow seasons – for example if you’re in the tourism industry, your cash flow might not be as strong during the school term.
3. Taking out the wrong type of loan
There are a variety of financing options available to business owners, making it easy to get confused, but with some research you can easily navigate the pros and cons of your options. Business loans can be either equity finance which is provided by an owner or investor, or debt finance which is provided by a lender and can be secured or unsecured. To decide which path to take, you need to know why you need the money in the first place.
As an example, a short term business loan might be beneficial if you have some big immediate expenses, such as purchasing stock or urgent repairs. This can give you access to cash quickly and you’re only in debt for a short period of time, although remember that interest rates are generally higher. If on the other hand you need to invest in some new equipment, equipment financing might be the way to go. If you take out the wrong type of business loan you could be left out of pocket, and you may see your bottom line take a turn for the worse.
4. Borrowing too much
Before you approach a lender, it’s important to determine exactly how much you need to borrow, because overborrowing could be a costly mistake. While it may be tempting to give yourself a “buffer” and borrow a little more than you need, remember you’re paying interest on the total loan amount and this will add up over time.
For example, a loan comparison calculator shows if you take out a $10,000 loan over 5 years at 5.5% interest with monthly repayments, your total repayments will be $14,361 (the calculation is indicative and used for demonstration purposes only and may not reflect current interest rates or loan sizes).
However, if you borrowed more than you needed, say $20,000 on the same loan terms, you’d pay $25,822 in total. This shows borrowing $20,000 instead of $10,000 would see you pay an extra $11,461 over the life of the loan – so only borrow as much as you need!
The moral of the story? Even if you’re eligible to borrow a larger amount, it doesn’t mean you should.
5. Changing your business structure
If you frequently change your business structure, this may raise a red flag for some lenders. Restructuring can be an expensive and risky time for businesses so lenders are concerned that costs can spiral for owners who do this often and are more likely to reject your loan application. If you know you’re going to need to borrow money in the future, try to keep with the one structure so that lenders are more confident in your ability to repay the loan.
Being aware of these common mistakes is key to avoiding them, which will help you make your business dream a reality. Happy borrowing!
Martketlend Academy: 4 ways to improve your shot at getting business finance
Need some general tips on improving your small business’s health –especially when it comes to getting finance? This week, we have the pleasure of welcoming Bessie Hassan, who shares our drive to educate the market and help small businesses. As the Money Expert for finder.com.au – the site that compares virtually everything – Bessie is an experienced commentator who often appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. Bessie is passionate about empowering Australians to make better decisions, whatever it is they’re looking for.
Whether you’re an entrepreneur looking to start a new business from scratch or a seasoned owner wanting to expand your business offshore, you’re going to need some capital at some point. To get your hands on this extra dosh, it’s likely you’ll need to take out a business loan. In business, time is money and money is time, so it’s worth knowing a thing or two about how to apply for finance the right way.
Here are four ways to improve your chance of getting the “green light” for your business loan.
1. Check your credit health
Although we’re told to keep our business and personal lives separate, this rarely happens for business owners, as lenders often look at both your company and personal credit scores before lending you money. There’s no point applying for a business loan if you know you don’t have a great credit history (either personally or via your business). Being patient and working to improve your credit score before applying will give you a better chance of securing finance.
Your company’s credit score will be impacted by how long you’ve been in operation, your credit enquiries, Personal Property Security Register (PPSR) registrations and director information. You can improve your score by paying your bills on time, keeping balances low on credit cards and communicating with your creditors. Your personal applications for credit and accounts held in your name may also be checked to help the lender determine your risk profile. Being happy with your credit score and taking steps to improve it will put you in a strong position to begin your finance search.
2. Have a solid business plan
Lenders are most concerned about your ability to repay the loan over time. They’re not going to fork out and invest in your business if they doubt you’ll be profitable and successful in the future, so they’ll want to see proof-points that your business can stand the test of time.
A thorough business plan will make it easier for you to communicate your business vision, strategies and goals to lenders. Including information about how the money will be used and some cash flow projections will show you’re serious about your business and confident in your ability to repay the loan.
3. Know what type of loan you need
There are many different financing options available for businesses. To be eligible for most, you’ll need to have an Australian Business Number (ABN) and for some you’ll need to have been operating for a certain period of time (eg one year for most unsecured loans). You also might need to generate a minimum amount of annual turnover, which can range between $50,000 and $200,000 depending on the type of loan you’re going for. To decide which option to take, you’ll need to understand why you need the capital in the first place.
For example, if you need some additional funds to meet daily business expenses, you might want to take out a business credit card. Remember you’ll need to compare providers to score the lowest interest rate you can. If your expenses can fluctuate (maybe on days when you purchase stock) then consider a business overdraft account, which allows you to overdraw on your business account to a certain limit.
There’s no point approaching a lender for equipment finance if you’re just going to spend the money on inventory – it’s important to do your research so you apply for a product that will complement your needs.
4. Don’t leave it until the eleventh hour
All businesses need money to operate so if you’re short on cash, your business’s lifespan may also be short. If you know you’re going to need extra cash in the near future, start researching your loan options now! Approval for a loan can take anywhere between a few days and a few months, depending on the type of finance you’re applying for. It’s important to have some time up your sleeve so you’re not rushing the application and can wait out the approval process (without going bankrupt in the meantime).
When embarking on your search for finance, it’s important to practise due diligence to ensure you take out a loan that will suit your business needs. Understanding your credit history, having a solid business plan in place, researching your finance options and being prepared are simple ways to improve your chance of being approved so you can make your business vision a reality.