The Gig Economy and Finance — Why It’ll Work For You
We are living in the “gig economy”. What does that mean for you and your business? The shift from full-time to gig-based work is shaking up the economy in a major way. But don’t be fooled – the gig economy is here to stay. Here’s how your business can take advantage of it.
Not too long ago, businesses hired full-time staff and constructed compensation packages to retain top talent. It was understood that the employer would take care of the employee and the employee would, in turn, pledge their loyalty to the business.
Though this model may still function in larger businesses, these types of posh employee positions are becoming scarce. Dynamic businesses – ones that grow and contract, startup businesses, or businesses that are stable but wanting to grow – have to think carefully before hiring full-time resources, especially at higher levels. What type of message does it send if a company hires an executive only to lay them off a short time later because of lack of funding, a market shift in demand, or because they ultimately find they don’t need that high-level expertise in that capacity? It may kill morale. It might compromise the company’s brand. It might subject the company to legal ramifications. It certainly would be a waste of money. Worst of all, the company may continue to retain but underutilize talent, which compromises both the company and the employee.
Similarly, there are many companies that need but can’t afford high-level, strategic talent. Most businesses only hire the best talent they can afford, not necessarily what they need. In finance, for example, a business may need a Controller but hires only a Bookkeeper. Or perhaps they really need strategic financial thinking, but their people only have experience in compliance. Consequently, the business lives with compromised financial information and a lack of intelligence to take advantage of opportunities – establishing efficiencies, entering new markets, expanding high margin lines of business, attracting competitive capital, etc. Without the talent they need but can’t afford, how could this type of company ever get to their next level?
Enter, the gig economy. The gig economy offers solutions to these problems – especially in finance. Ask yourself the following questions:
- Am I hiring what I can afford and not what I need?
- Do I have the information necessary to make important business decisions?
- Do I manage my business exclusively off of my Net Income and disregard Gross Profit Margins, Return on Equity, and industry standard ratios?
- Do I know how to extract meaning from a Balance Sheet?
- Is most of my time spent chasing cash to meet my obligations?
- Do I have a forecast with Revenue goals and an understanding of the relationships between the corresponding cost categories?
- Do I hold my people accountable to established goals and metrics?
- Do I have a strategy?
If the answer to any of these questions is “no”, maybe it’s time to look at a fractional finance resource. The flexibility of fractional resources can offer a myriad of possibilities within the same budget framework. Maybe instead of a full-time Controller you really need a full-time bookkeeper, a Controller for one day per week (to assure financial integrity of your financials), and a CFO for one day a month (to review your financials with you and identify potential areas of concern and growth). Maybe you need a CFO to come into your business and get your financial house in order – a concentrated, one-time expense – and then have a Controller or CFO return on a systemic basis to ensure accountability and progress. The combinations are endless.
Although much has changed in how the current economy values, rewards, and manages human capital; one thing has remained the same… the companies with the best people always seem to win. Companies need the top talent to be successful. Without the right human capital, there are rough seas ahead for your business. Top financial talent can help you see around corners, take advantage of opportunities, and spend your money more wisely. Why spend top dollar for a full-time resource, when you can only pay for the hours you need? Take advantage of the gig economy and start paying for the work your business requires. Equip your team with top talent and see how you can make the gig economy work for your business.
Patrick Ord has over 20 years of experience in different finance, strategy, and operational capacities — with experience as a Consultant, CFO, Business Owner, and Division President. He has worked in Tech (SaaS, Software, PaaS), Real Estate (Development and Home Building), Construction, and Professional Services. As CFO of a real estate development and home building company, he helped grow the company from $30 million to $90 million in annual revenues. Patrick is a consultant in Advanced CFO’s fractional CFO and Turnaround practices. He can be reached at email@example.com.