What kind of business will be successful coming out of this recession?
And, how do we build it?
That is the big question for every entrepreneur who is either starting up now – or already on the journey.
So, what will happen… and what do we do about it?
The end of Jobs
Firstly, jobs – they aren’t making these any more. The statistics show this to be true – UK self-employment has grown strongly to over 1m in the past couple of years, whilst PCG – the trade association for freelancers – estimates that there are 1.4m freelancers in the UK (excluding casual trades such as construction or hotel workers).
Equally, the US jobs market has demonstrated that despite the economic bounce following the near catastrophic fall in 2008, there has been no over all increase in the number of jobs.
Similarly, anecdotal evidence points to the fact that the US is rapidly becoming a freelance economy too with a sharp rise in the number of people opting for a freelance lifestyle.
Okay, so from this, we can see that the end of jobs is near – the opportunities of the future will not be salaried positions but something different.
Work of the future – a video game
JP Rangaswami, BT’s Chief Scientist, forecast at a recent BVCA event in Manchester that work of the future will be more like a video game. In fact, he predicted that we would be actively ‘gaming’ or perhaps working on a number of video games (sorry, projects) at any one time.
What he is really saying is that all work will become project based. A project will have an end goal – such as reach the top level and defeat the evil genie – and that there will be a series of levels to work through and challenges to overcome at various stages.
The arrival at the final destination is not certain in time – so this is not a 3 month project – but a project to solve certain challenges and deliver a solutions or outcomes – so it could take a week or 6 months.
And, we might play/ work on a number of different games/ projects for a variety of different businesses at the same time.
So what does the entrepreneur do?
Firstly, if you are starting out – don’t fall into the old trap of hiring jobs. Instead, take everyone on on a freelance or contract basis.
Not doing this – because you feel that you can control employees or can protect your IP – is a critical mistake. It is an error which I made and it resulted in me closing a company that had grown to ?4m turn over. The sharp changes in our market, rigid employment laws and hidden growth of entitlements end employee rights meant that we closed the company instead of re-investing it in.
It was better to clean and tidy up – and begin again. So, now, my business is entirely virtual and freelance. My strong recommendation is that you don’t repeat this error.
So, what does the entrepreneur do? The entrepreneur must become adapt at setting the objectives of each project and hiring in the right people.
Of course, hiring is an extremely difficult and dangerous (ie we get it badly wrong half the time and fail to get the best/right person 85% of the time).
Therefore, build your resource with freelance talent and outsourced resources. This will ensure that you can switch it on or off according to how the market responds to your product.
For instance, high quality marketing will also include feedback on how your product/ service is received – and that means that you may wish to stop the production line and begin to redevelop or rework the product.
With freelance marketing talent – you can start and stop – to fit your production – but with employees you can not.
Sudden growth / demand in your market might be followed by intense price competition – with freelance resource – you can respond – profitably – to this. With large fixed pay roll, it will cost around ?100k to restructure your business each time your market shifts.
Do you want to set up future costs of ?100k for restructuring? Obviously, not.
All of this is leading to what companies will look like in the future.
When I say ‘look like’ what I really mean is that as usual many companies will fail and what we will be left with are the successful businesses. These will be highly flexible businesses that have solved how to engage freelance talent and resouce.
The virtual businesses will be the agile businesses able to take advantage of opportunity with low cost of changing direction.
It means, of course, the end of firms as we know it. Instead, we will join project teams, be given certain objectives and set on our way.
The smart entrepreneur is preparing for this. Why? Well, watch what the big companies are doing – they are slowly laying off staff – first the IT department, then HR gets outsourced. Next up will be the marketing department.
The shift is already taking place, wise entrepreneurs recognise this shift and are positioning themselves to take advantage.
What are you doing with your business?