What’s Yours is Mine? The New Sharing Economy and Small Business

In recent years, many workers have found new ways to earn a living, becoming their own bosses as they enjoy a freelance lifestyle. Whether they’re offering rides to the airport through Lyft or Uber, or running errands through TaskRabbit, people are redefining the way they earn a living and blazing a trail for future generations.

But there are downsides to working this way. For freelancers, the unpredictability of work and changing pay structures make it sometimes difficult to make a reliable living. But for businesses and the American economy as a whole, the impact can be far more widespread.

Pros and Cons of Our New Sharing Economy

Pro: Growth of Outsourcing Opportunities

The increase in freelance workers gives businesses a great alternative to hiring full-time, salaried workers. Instead they can outsource work on a per-project basis and continue working with those employees if they do well.

Additionally, errand services like TaskRabbit give professionals the ability to outsource mundane personal tasks, like picking up dry cleaning or running errands. They can then focus on their own work. For traveling professionals, Lyft and Uber have proven to be a better alternative to taxis and public transportation, allowing them to call for a car and pay all on their mobile devices.

Con: Shortage of Skilled Workers

Unfortunately, a sharing society also means fewer professionals in the workforce. As the unemployment rate drops, this could result in there being a national labor shortage, where businesses scramble for help from what is a much smaller pool of skilled workers who are willing to work a structured office schedule.

The Millennial generation is now filling the workplace, and they have expressed their preferences for a fun and flexible workplace. The workforce of the future will require a performance-based workday rather than one that is measured by time clocks and traditional 40 hour work weeks.

Pro: Entrepreneurs Working Together

The ad hoc environment can be very good for business owners, who can take advantage of the large variety of skilled freelancers available.

More shared work spaces like Canvs are opening up across the country, providing desks and meeting space for a variety of talented independent workers and small businesses. Co-working spaces encourage collaboration, prompting entrepreneurs to learn from and help each other as they build their businesses.

These centers also serve to help build the local economy by encouraging business growth.

Con: Wage Degradation

There are some who are concerned about these shared labor concepts. Economist Dean Baker pointed out to the New York Times, that the wages workers make in these gigs can equate to less than minimum wage. He expressed concern that in time, this could create a downward pressure on wages overall that could impact the earning ability of mainstream America.

However, for the most entrepreneurial-minded workers, this type of work can help build the confidence they need to start their own businesses.

The new sharing economy opens opportunities for both consumers and workers, allowing people to work on their own terms. With the unemployment rate still high, this sharing economy is enabling people to make money while they wait for job opportunities to open up.

It seems to me that the freedom of being your own boss is empowering and has the potential to inspire many to start their own businesses – which benefits the economy as a whole.

Small Businesses Do 40 Percent of the Hiring in the Gig Economy, New Study Says

Over the course of the last decade, the so-called “gig economy” has rapidly expanded to become one of America’s most crucial labor markets. Around one in three American workers are now freelancers, and more than one third of Millennials.

And according to a new study compiled by LinkedIn (NYSE:LNKD), it’s small business owners that are the driving force behind that exponential growth.

The Gig Economy and Small Businesses

The Gig Economy and Small Businesses

Researchers at the world’s largest professional networking site found that small businesses are now responsible for an estimated 40 percent of all hiring activity across the wider gig economy, with midmarket companies and enterprises accounting for 35 percent and 25 percent, respectively.

The study also found that 93 percent of contractors and freelancers as a collective are likely to consider working at a small business — which comes in at three percent higher than the global average for business professionals.

Software and IT services tops the list of industry segments with the largest number of contractors and freelancers in the gig economy, boasting a talent base of some 223,000 professionals. Media and communications comes in second with 166,000 contractors, followed by healthcare with 164,000.

The Gig Economy and Small Businesses - Top Industries

It’s also worth pointing out that, according to LinkedIn data, 70 percent of all contractors who switched jobs in the past year also moved to a different industry.

“This means that if you’re not having luck with recruiting contractors within your industry, you may have much more success if you look outside it,” researchers said.

“The healthcare, real estate and construction industries have gained contractors over the past year, while public safety, retail, and the arts have lost them.”

The Gig Economy and Small Businesses - Industry Migration

As one might predict, the majority of that talent has migrated to either the East or West Coast.

Cities like Seattle and Portland have experienced a net population gain of eight percent over the past year in terms of available contractors, with San Francisco experiencing a six percent gain and New York’s gig economy increasing four percent.

That being said, Denver bucked the trend by posting an eight percent net gain in the size of its freelance pool. The survey also classed Denver as a “hidden gem” due to its high supply of freelance professionals, at approximately 38,000, but relatively low demand.

The Gig Economy and Small Businesses - Supply and Demand

Bearing in mind that the median job for an American contractor lasts for some 11 months, the study suggests that a substantial number of freelancers are indeed willing to relocate — with 13 percent of contractors who switched companies over the last year also moving to a new region.

The data from LinkedIn’s study is aggregated from a range of public LinkedIn profiles, with contractor status having been determined through member supplied position titles and behavioral analysis.

How is Your Small Business Facing Today’s Challenges?

According to the Small Business Index, a recent survey of 1,000 small business owners by MetLife and the U.S. Chamber of Commerce, there’s a lot of confidence in the small business community; but, it’s tempered by concerns about the economy.

In fact, the Index found that 60.6 percent of small business owners have a positive outlook for their company and the environment in which they operate. The insights go even deeper than that, though, and reveal the areas where small business owners are feeling more confident.

For example, small business owners feel good about the overall health of their businesses and revenue expectations. But their takes on the state of the national and local economies and quality of employee recruits tend to be less sunny.

To learn more and chat about the new Small Business Index findings, join our upcoming Twitter chat. The chat will feature more information from the research along with some actionable insights you can use to improve and grow your business.

Small Business Trends’ founder and CEO Anita Campbell (@smallbiztrends) will moderate the chat. She will be joined by fellow small business influencers, Rieva Lesonsky (@Rieva) and Susan Solovic (@SusanSolovic). The chat is scheduled for June 21 from 7 to 8 P.M. EDT.

Here are some of the topics that will be covered:

How are Entrepreneurs Overcoming Small Business Challenges?

What are some positives for today’s small businesses? According to the Small Business Index from MetLife and the U.S. Chamber of Commerce, small business owners are generally optimistic about their overall business health. And there are a couple of other areas where business owners tend to feel positively.

Where is there room for improvement? But those positive feelings don’t necessarily extend to all areas of business and the economy. For example, some business owners seem to feel less optimistic about the national economy as a whole, as well as their local economies.

What are some actionable insights businesses can take to improve? So what can small businesses do with this information? Using the data gathered by MetLife and the U.S. Chamber of Commerce, chat participants will discuss some steps you can take to improve your small business outlook going forward.

More Details:

What: Twitter Chat “Voices of Small Business: How Business Owners are Confronting Today’s Challenges”

Who:

  • Anita Campbell, CEO of Small Business Trends (@smallbiztrends)
  • Rieva Lesonsky (@Rieva)
  • Susan Solovic (@SusanSolovic)

Where: Twitter

Hashtag: #MetLifeSmallBiz

When: June 21, 2017 7-8 P.M. EDT

Sony Mobile Xperia XA1: small but spectacular

The Sony Mobile Xperia XA1 is the smallest of the recently released lineup of Xperia smartphones that includes the Xperia XZ Premium and the Xperia L1, yet it comes with some particularly powerful features, namely the 23MP rear camera.

It boasts an Exmor RS for mobile sensor, resulting in brighter and more vivid images and professional quality smartphone pictures, while the F2.0 wide-angel lens is perfect for large group shots and landscape photography.

The Sony Mobile Xperia XA1 uses a power-efficient processor designed to keep the smartphone powered for longer, which allows you to browse the web, watch videos and play video games for longer periods without having to worry about the device’s battery.

With a gorgeous borderless design that fits comfortable in your hand, the Sony Mobile Xperia XA1 is easily the most subtle of the latest range of Xperia smartphones and is a joy to both handle and to use.

If You Care About Small Business, Keep the Home Mortgage Interest Deduction

President Obama’s budget reform commission proposed eliminating the home mortgage interest deduction. This idea has analysts scurrying to estimate the proposal’s economic impact.

Unfortunately, our lawmakers often forget the law of unintended consequences when offering up changes to policies. In this case, our elected officials need to consider how making mortgage interest non-tax deductable will impact small business credit markets.

While policy makers might not see the connection, the mortgage interest deduction is linked to small business credit. That’s because the deduction helps to prop up housing prices. With 25 percent of those running small companies using home equity to fund their businesses, a drop in housing prices would mean that small business loans and lines of credit would be harder to come by.

Mortgage Interest Deduction

Getting rid of the mortgage interest tax deduction will have a sizeable effect on small business credit markets. Analysis by the National Association of Realtors indicates that home prices would drop 15 percent in the absence of this deduction. A study I conducted with Mark Schweitzer of the Federal Reserve Bank of Cleveland shows that each one percent decline in housing prices lowers the value of home equity loans (HELOCS) by 1.33 percent. Combined with the estimate of the home price decline from no longer being able to deduct mortgage interest from your taxes, this shift would mean a 20 percent drop in the value of HELOCS.

That’s a lot less small business credit. A report by the New York Fed put the dollar value of outstanding HELOCs at $700 billion in the beginning of 2010. Thus, we should expect to see a $140 billion decline in outstanding HELOCs if the home mortgage interest deduction were eliminated.

A sizeable chunk of this decline would be borne by small business owners. Analysis of the Federal Reserve’s consumer finance survey shows that business owners accounted for one quarter of home equity loans in 2007, the latest year for which data are available. Thus, dropping the deductability of mortgage interest would shave $35 billion from small business owners’ home equity loans.

While we don’t know for sure how much of small business owners’ home equity borrowing is financing business operations, the amount is sizeable. Analysis of Fed consumer finance survey data indicates that households with businesses had median home equity debt that was 50 percent more than that of households without businesses in 2007. If the difference in debt levels between the two types of households represents the portion of home equity borrowing the business owners are using to finance their companies, then one third of the small business owning households’ home equity borrowing is being used to support business operations.

The reduction in housing prices estimated to come from dropping the deductability of mortgage interest would lead to a projected $11.7 billion decline in home equity borrowing by small business owners for business purposes. That’s about 16 percent of the $71.8 billion in loan originations made to small companies (businesses with less than $1 million in annual sales) in 2009, the latest year for which data are available.

And that’s just the effect of eliminating the mortgage interest deduction on small business owners use of home equity loans to finance their companies. Any effect of the eliminated deduction on other types of loans used to tap home equity for business purposes would be on top of this.

Our elected officials need to consider the law of unintended consequences when they debate eliminating the mortgage interest deduction. Doing so will cause a contraction in the small business credit market that could lead small businesses to cut back on capital investment and hiring.

Change to SAFE Mortgage Licensing Act Would Benefit Small Lenders

A bill now moving through the Senate is being hailed as a triumph for small business. The legislation, if approved, would make it easier for loan officers leaving a big bank to take a job with a small independent lender or start a brokerage.

The bill, H.R. 2121, referred to as the SAFE Transitional License Act of 2015, introduced by Rep. Steve Stivers (R-OH) in 2015, modifies the SAFE Mortgage Licensing Act of 2008 by giving mortgage loan originators a 120-day grace period to obtain a new license when changing jobs so they can continue to originate loans.

H.R. 2121 in Detail – SAFE Mortgage Licensing Act Changes

The bill’s provisions apply to loan officers who move from a federally insured depository institution, such as a bank or credit union, to an independent mortgage bank or brokerage firm, some of these small businesses. It also provides transitional authority to mortgage loan originators who move from one state to another. To qualify, these individuals would have to be employed by a financial institution for the previous 12 months.

Loan originators employed by federally insured depositories must obtain a state license to become a mortgage loan originator at a non-bank institution. The process can take weeks or even months to complete due to stringent requirements that include pre-licensing and annual continuing education requirements, passage of a comprehensive test and criminal and financial background checks. They must also register with the National Mortgage Licensing System and Registry.

Because the SAFE Act of 2008 contains no transitional license provision, it “inhibits job mobility and puts independent mortgage lenders at a considerable disadvantage in recruiting talented individuals,” Stivers said in a press release announcing the bill.

Proposed SAFE Mortgage Licensing Act Change Gives Grace Period for Loan Brokers

Unless the new bill passes, loan officers who move from federally-insured institutions to a non-bank lender must “sit on their hands for weeks, even months, while they meet the SAFE Act’s licensing and testing requirements,” he said.

H.R. 2121 is a simple solution that would allow these individuals to continue working and underwriting loans, while in no way weakening the consumer protections of the SAFE Act, according to Stivers.

H.R. 2121 a Small Business Jobs Bill

Both Stivers and Rep. Jeb Hensarling, Financial Services Committee chair, agree that this is a job’s bill that affects small businesses.

“This is a jobs issue, providing qualified mortgage professionals more portability and a minimal amount of work disruption when making a change in an employer,” Stivers said in a press release announcing House support for the bill.

In an email to Small Business Trends, he added, “This bill reduces the regulatory burden on small businesses and lenders by ensuring qualified mortgage professionals can continue to originate loans during a work transition.”

Hensarling, in a Financial Services Committee press release, said, “I believe most of us would agree that our economy works better for all Americans when small businesses can focus on creating jobs rather than navigating bureaucratic red tape.”

Support for the SAFE Act

Industry groups such as the Mortgage Bankers Association (MBA), Community Home Lenders Association (CHLA) and the National Association of Independent Housing Professionals (NAIHP) strongly support the bill. Leaders from each group made the following comments in a statement:

“In today’s dynamic mortgage marketplace, this bill addresses the need for true labor force mobility across state lines and between institutions,” said MBA chairman Bill Cosgrove. “It also offers no new regulatory burdens, and is well within the guardrails of current oversight by state regulators and the Consumer Financial Protection Bureau.”

Following the passage of the SAFE Act of 2008, many broker lending officers went to work for the banks, said NAIHP president Marc Savitt.

“The Stivers’ bill will make it easier for lending officers to return to the brokerage business,” he said. “We will welcome them back to the brokerage side.”

CHLA executive director Scott Olson said his group is urging the Consumer Financial Protection Bureau to require consumer disclosures regarding a lenders adherence to the SAFE Act.

“Such disclosures would show if lending officers are licensed and meet all the requirements of the SAFE Act, including an independent background check and continuing education courses,” he said.

H.R. 2121 came out of the House Financial Services Committee and was co-sponsored by Representatives Terri Sewell (D-AL), Joyce Beatty (D-OH), Lynn Westmoreland (R-GA), Kyrsten Sinema (D-AZ) and Luke Messer (R-IN).

The bill recently won the support of the House and has now been passed along to the Senate Committee on Banking, Housing, and Urban Affairs, for consideration.

The online shop where everything costs just 50p – but there’s a small catch

BARGAIN hunters can now cash in on the ultimate no-frills online website where everything cost just 50p.

The online store, simply called fiftypencefashion, offers a whole range of products – from kids accessories to jewellery and makeup – for just 50 pence.

The online store offers a whole range of products for just 50p

The online store offers a whole range of products for just 50p

Postage is free on all items and new stock is delivered on a weekly basis.

Freebie hunter Anushka Fernando, who works at Magic Freebies UK, first discovered the website while looking for cheap cosmetics online.

She said: “Fiftypencefashion offer a whole range of items for just 50p. Naturally, I went straight to the cosmetics section, and was surprised to find branded nail polishes from Collection and eye-shadows by Max Factor.

“If you do some digging around, you can find all sorts of bargains. Plus, they stock a wide range of party items including partyware, party bag fillers, invitations and wrapping paper – perfect for mums on a budget!”

But there’s one small catch that shoppers need to know about – you are required to spend at least £10 per order, meaning you’ll need to stock up on those bargains.

Here are some of the best deals spotted on the website this morning:

Makeup

Collection 2000 long last gel eye liner
Cost: £4.99 at Boots and Superdrug
Saving with fiftypencefashion: £4.00

Max factor max effect trio tester pots
Cost: £1.99 at Superdrug for one palette (£5.97 for three)
Saving: £5.47

7

Nails

Collection 2000 Hot looks nail varnish
Cost: £1.99 at Boots
Saving: £1.49

7

Jewellery

Summer bracelets
Cost: Juelz beaded bracelet between £2.39 – £3.99 on eBay
Saving: between £1.89 – £3.49

7

Hair

Floral alice band and scrunchies set
Cost: £4.99 on Amazon
Saving: £4.09

7

Party supplies

12ft party banner
Cost: £1 on Amazon
Save: 50p

To snap up other online bargains, check out eBay – as an investigation by the Sun Online earlier this year found that shops flog leftover stock on the auction site and discounts can be as good as 80 per cent off high street prices.

Over 50 big names, including Argos, Debenhams, Lakeland, Tesco and Superdrug, have official shops on eBay.

The products are mostly new and never-been-used end of line stock or leftover sales items. Some shops may sell “refurbished” items which are usually products which have been returned by customers.