Notes on the outlook for the self-employed
We provide the latest insights into the economic situation for the creative community and the self-employed in particular. While non-essential retail has opened its doors this week, the economy hangs in the balance. What next for the months ahead?
The following is an overview of Moose’s talk at the Design Dialogue webinar this month. The conversation was in-depth, exploring a wide range of issues and ideas; from business recovery and working with policymakers through to inclusion and tackling racism. Design Dialogue is a network that meets to discuss the future of design in the UK.
The real cash consequences of lockdown are beginning to flush through the system for the self-employed community as 60 (often 90) day payment term invoices are cleared.
We have seen early evidence to suggest that many sole traders will face an average decline of 60% in cash receipts over the summer period.
Those with sizeable cash reserves will be better placed to weather the choppy downturn. But for the many who have fallen through the cracks, it will be a precarious period of uncertainty.
Bounce(ing) Back Loans:
There is one option for respite for those struggling in the form of The Bounce Back Loan Scheme. Sole traders and small businesses will perhaps never see commercial terms that are as good for borrowing.
It’s certainly something to consider for those in need of a cash injection to tide them over until invoices start getting paid later in the year.
We wrote an earlier journal on bounce back loans here.
The furlough cliff edge:
The macroeconomic climate that has begun to develop is worrying, and the outcome could potentially be far worse than the financial crash of 2008. The furlough scheme was a calculated lever to pull by Rishi Sunak, but has created a false sense of security for millions of workers.
Nobody is sure on the scale of redundancies that lie ahead of this summer. Conservative estimates have this in the 1-2 million range, and the creative community will be hard hit.
Starling Bank has closed applications for its sole trader accounts this week, giving us an early indication that the number of people entering the freelancer job market could be huge.
Propping up day rates
This flood of supply into the freelance markets will create a buyer’s market, and it is in these conditions that we see a decline in effective day rates.
Freelancers who have been trading for 10 to 15 years will tell you that they earn the same (or sometimes even less) than in the mid-2000s.
Survival is the priority for many SMEs today, but consider the longer-term impacts of lowering day rates/project fees.
Supporting emerging talent:
Every generation has challenges they face when entering the job market. For those graduating or trying to start a business right now, they are emerging into one of the toughest markets ever seen.
The road ahead for young BAME creatives and those who are at a disadvantage due to discrimination even in the good times, will inevitably be the hardest hit. We heard from furniture maker, Mac Collins during the Design Dialogue event who is part of Design Can – a campaign calling for the design industry to be inclusive. They have a number of resources to help businesses champion underrepresented talent and hire for fresh perspectives.
Thinking about how micro and small players can be encouraged to recruit and educate the next generation is going to be a crucial policy for the government to consider.
Traditional learning and development environments have been centralized in larger agencies, studios and practices. As they cut jobs to survive, the onus on supporting the next generation will be spread across the industry.
We understand that many in the self-employed community are feeling lost right now. We’re here to help with any concerns and questions you have about the months ahead. Give us call on 0203 026 4679 or drop us an email at email@example.com to start the conversation.
Newsletter sign up
Sign up for our journal newsletter, published twice a month.