What Is the Gig Economy? Experts Explain the New Frontier of Business Opportunity
If you’ve listened to the language coming out of Silicon Valley in recent years, you’ve likely noticed there’s a fixation on the idea of “disrupting” an industry. Taxis, hotels and grocers have all witnessed a significant change in the landscape of their industry due to technology-based solutions that often base themselves on the foundation of a “gig economy”.
But what is the gig economy exactly? According to the Bureau of Labor Statistics, “a gig describes a single project or task for which a worker is hired, often through a digital marketplace, to work on demand.” The gig economy is made up primarily of remote freelancers in a variety of markets who work on a project-by-project basis. Whether you are looking for a simple gig driving for a car service, or a more specialized project in a field like graphic design, the opportunities are vast.
From 2002–2013, the gig economy grew tremendously. The BLS reports that during that timeframe, all industry sectors experienced growth in non-employer businesses. A recent Upwork survey found that freelancers made an estimated $1 trillion in 2016, with 55 million workers making up 35 percent of the total American workforce.
How are all these freelancers finding work? An article in BBC reports that contractors have the internet to thank: “Thanks to the rise of on-demand talent marketplaces, the so-called ‘gig economy’ is fast becoming a reality. Cloud-based platforms are making it easier for firms to find the people they need from a global talent pool, and for freelancers to advertise their skills.”
The gig economy is making waves across several industries. We asked professional freelancers about what their work is like, and how both businesses and freelancers can benefit from this business arrangement. Here’s what they had to say about being successful in the gig economy.
Focus on what you do well
The biggest appeal for freelancing is the ability to work remotely, on your own schedule. Rather than swiping their time card at a 9-to-5 daily gig, freelancers can work whenever and wherever they want. But these perks come with some challenges. Though you can charge more hourly as a freelancer, you will be responsible for all your own overhead. You will also have to manage administrative tasks you may not be interested or skilled in.
Freelancer and consultant Naresh Vissa recommends outsourcing some of those tasks.
“As a contractor, you are responsible for all your housekeeping. They can be a huge pain, so get an accountant to handle it all,” Vissa says. “It's well worth the money, especially since accountants will find ways to save you money on taxes. Don’t waste time. You should be focusing your efforts on delivering value to your clients.”
Bring unique skillsets to the table
Vissa says that when it comes to freelancing, you’ll have less competition when you offer more specialized skills to clients. Some companies prefer to outsource more basic work to save money. Offering a specialized skillset like computer programming, Google AdWords or copywriting or editing will likely mean less competition for you on the front end.
Matt Hensler, owner of Hensler Integrated Marketing, says freelancing offered him the ability to build relationships with companies or clients you want to work with and weed out those you don’t.
“[Freelancing] gives you the opportunity to test a company. I’ve worked with some not so great companies on a full-time basis and felt stuck, but as a contractor, you have a little more control of what projects and companies you want to work with,” Hensler says.
What’s the best way to get repeat business with a company you enjoyed working with? Much of it comes down to professionalism. Hensler says that being proactive and meeting deadlines is the best way to develop a long-term relationship with any company.
According to freelancer Mindi Rosser of Mindi Rosser Marketing, technology is what keeps the gig economy growing.
“The systems, the support and the technology have evolved to the point where it's completely normal to hop on Zoom to chat with a client and skip the face-to-face meeting altogether. Online networking and personal branding allows freelancers to connect with their target audiences, no matter where they are in the world. Social media is no longer a ‘nice-to-have’ but an essential tool to attract clients and get gigs,” she says.
Consider all your options
Writer Suzanne Delzio says spending time working a traditional 9–5 job before you dive into the freelance world can strengthen your skills and help you down the road. She says, “I think it's important for new grads to spend 5 to 10 years working for someone else. Consider it a post-graduate program.”
Since the gig economy can be unpredictable, you can use that time to set money aside. “It took me a good three years to get my feet under me in this new business,” she says.
Start with a “side hustle”
If you’re already working a traditional career and want to get into the gig economy, it isn’t too late. Vissa says you can start a side project in addition to your other work to gain clients and grow your portfolio or experience.
“Keeping the rising demand for freelancing in mind, aspiring independent consultants should always start with a side business. That's what I did when I got my first client in college,” Vissa says. “By the time I was in grad school, I had nearly ten clients under my belt. When I went out on my own for good, I developed enough relationships to make my consulting business profitable from day one.”
How does the gig economy impact businesses?
The rise of short-term contract work and sharing economy-based business models can cut both ways. Some established businesses face increased competition from enterprising workers who now have easy-to-use platforms to sell their services with. This competition isn’t just for professional services like design or business consulting, entire industries can be upended or challenged as new competitors like Uber and Airbnb embrace business models that allow people to meet customer demand in a decentralized way.
But there are also some clear benefits to the gig economy for businesses. Businesses who see spikes in demand or infrequently need specialized services may find short-term contract workers as a more financially prudent option. While independent contractor positions are not at all new, workers may be more willing to accept short-term positions as gig-based work becomes more common.
With this growing trend, you may be wondering how all these professionals are finding these gigs. While some are certainly facilitated by apps and technology, there’s still plenty of gig and contract work sourced the “old fashioned” way—through a recruiter. These employment specialists know what it takes to seek out talented people and lure them into mutually beneficial business relationships. Learn more about what it takes to successfully match people with the right jobs in our article, “What Does a Recruiter Do? Insiders Identify the Traits of the Industry’s Best.”