Real business stories

Self employed in COVID-19: Should I continue to work for myself?

From local retailers to international airlines to global manufacturers, every business has felt the impact of the coronavirus pandemic. The UK Government responded with a range of counter measures to combat the economic downturn.

While this support has helped many businesses across the UK, statistics show that 76% of British businesses are a one-person operation, employing no-one other than the owner. The Business Finance Guide met with three self-employed people to discuss how the pandemic has affected them.

We spoke to a recruitment consultant from the North West, a training and development professional from the North East and a hair stylist from the South East. They discussed the challenges they’ve faced since March 2020, where they are now, and what the future holds for the grass roots of the British economy.

Meet the businesses

Recruitment consultant – North West: I first started my recruitment business 11 years ago. I had previously worked in senior management for a well-known, high-street recruiter and wanted to have more of a people focus, so decided to start my own business.

Recruitment, especially for the big recruiters, is very much maligned as an industry. I built my business on the basis of quality. I meet and interview in person every candidate that I put forward and I’ve been successful in that, from that very first meeting, I can pick a great match for the role and the employer.

Stylist – London: I launched my business, Sulky Doll, in 2015 after completing a styling course at the London School of Styling. My background was in healthcare, but styling had always been a passion of mine, so I finally decided to do something about it.

My scope of work includes personal styling, red-carpet styling, social media and magazine shoots, as well as styling for film, TV and advertising, I’ve been able to carve out an excellent client base for myself.

Training and development consultant – North East: I started my learning and development business two years ago with help from National Enterprise Allowance and Jobcentre Plus, and it’s progressed steadily over that time. I now have a bank of 12 trainers working with me (also self-employed) and have developed my own programme and workshops. I have a good client base including a Premiership football club, a leading super market chain and a national charity.

What was your business like before the pandemic hit?

Stylist: Before COVID-19 hit, the majority of my work was face-to-face. I would travel up to London at least three times a week for meetings with PRs and prospective clients, as well as for various shoots or taking my clients personal shopping and networking. I was extremely busy at the beginning of the new year with a lot of exciting projects lined up. However, 20th March was my last shoot.

Recruitment consultant: March is typically really great for recruiters as it’s a five-week month. I was having my best March on record. While I was well informed about COVID-19 and not under immediate pressure, I was actually faced with a situation where I had job offers rescinded after my candidates had accepted them and handed in their notice at their previous job. Fortunately, I was able to work with the clients in both cases to ensure that the candidates were both employed and then furloughed, but the stress of that was a sign of what was to come. March was the last time that I placed a candidate.

Training and development consultant: In my day-to-day job, I would go into businesses and look at them holistically. I examine their business culture, analyse their training needs and point them in the right direction. I also look at sickness rate, retention rate and morale. Much of what I would do was face-to-face, and I spent time speaking to employees or students about their experience at school and work. In February 2020, I had just signed up a big school project that was due to kick off in April before the pandemic hit the UK.

What has been the impact of COVID-19 on the function of your business?

Recruitment consultant: Honestly, it’s all depended on how well you are into Zoom and, typically, I’m not. I would interview for every single client face-to-face and now obviously I can’t. I think futuristically Zoom could enhance, to a degree, what I do. It could give me more scope to recruit in a wider area, or it could make the first-stage interview that I would usually conduct over the telephone more efficient.

However, the pandemic has made candidates very reticent about moving roles. Many are drawn to furlough, or the prospect of a redundancy pay-out. For candidates who have been in their current roles for a long time, salary and benefits are not portable. In the short to medium term it will be an ‘employers’ market’. There will be intensive competition for jobs and employers will have the capacity to lower their offers.

Training and development consultant: Right in the beginning, nobody even wanted to talk to me. They wouldn’t answer at my phone calls. I’ve been extremely lucky with my client Mencap, where I worked two days a week, as they asked me to go full-time and help develop their remote learning.

Stylist: In the lead-up to lockdown, I had someone ring me up to cancel or reschedule every single day. I lost a third of my annual income in the space of one week. But it wasn’t just what that represented in terms of my income, it was 18 months of hard work pushed back or cancelled completely. All the connections I had made had ‘gone to waste’ in a sense because as a freelancer, you don’t get paid in the hope that a conversation turns into something.

How did you respond to these challenges?

Training and development consultant: I was extremely fortunate to be able to work for Mencap five days a week. But I also decided to use this time to upskill myself. I took a new course and can now add ‘blended delivery’ to my offer. This technique encompasses training in the form of face-to-face delivery, remote delivery (e.g. through a Zoom call) and virtual (pre-recorded) delivery. It has been a positive for me as I can now be more versatile and cater to what works best for each company I work with.

With many people choosing to continue to work remotely, new skills will need to be learned. We all have different ways of communicating, especially when we work remotely, and it’s important to have everyone in the business aligned.

Stylist: Because of my healthcare background, I put in some shifts at the local hospital when there was a shortage of NHS staff, which not only meant I could help but also earn a little money.

Luckily, I had also just completed a big commercial shoot just before coronavirus hit, so I had enough money to tide me over until mid-June when I was able to go back to work. I have children, so I spent the time I wasn’t able to work home-schooling them. I also reached out to local boutiques and magazines to help them with their social media and editorials.

Recruitment consultant: It’s a question I’m a bit raw about. There was a lot of denial in the recruitment sector. A lot of recruiters chose to ignore the writing on the wall and seemed to have decided in March and April that this was just a blip, and would all be over quickly.

The ‘pivot’ question is actually a really personal one. I think it depends on your balance sheet, your skillset and your level of experience. I believe that I had a great business before COVID-19 struck, and I’m not convinced that the world will have changed enough for the economy not to come back, even if it doesn’t return to the heights that it was at before. I have chosen not to have the overheads or to employ staff. I have seen a lot of recruiters try to ‘de-package’ by offering elements of the full recruitment service, like CV-sifting.

Did you seek out any government support that was on offer?

Stylist: Unfortunately, a lot of the government measures like the tax deferral, CBILS and Future Fund didn’t apply to me. I was one of the three million business owners who were excluded, many of whom are in the creative industry. I did receive a letter from my bank to say that they would increase my overdraft until April, but that was about it.

For many freelancers like myself, brands that want to work with you, rather than pay you a day rate, will take you on as an employee for a month or a few weeks or will just have you on their payroll. All of which is an inconvenience when your tax comes in as you have to pay tax on all of that, as well as your self-employment tax. It would have been a real help to receive some financial support, but luckily my big commercial shoot at the beginning of the year pulled me through.

Recruitment consultant: I’ve always been a permanent non-borrower. I’ve kept purposefully small and avoided overheads and I’ve been able to mothball the business as a result. It’s the choice that I’ve made – I don’t think we’ll see much happen until the new year in terms of recruitment but I’m prepared, although it has been a mental and emotional challenge to hold true to that.

Training and development consultant: All my contracts were just starting, and I’d only had one or two training projects. That meant I didn’t have continual revenue coming in that a lender could use in its assessments, so I got nothing. I was told I could go on Universal Credit – which is a great help for many – but it wasn’t particularity helpful for me personally as one of the reasons I set up my business was to avoid going on it in the first place.

Finally, what does the future hold?

Recruitment consultant: I think a lot of the big recruiters will move even further towards the high-volume and low-margin work, almost de-personalising the industry even more. As a result, you’ll see a lot more smaller recruiters like me emerge next year. I think it will be a tough time to start a recruitment business.

Recruiters have to prepare for things not to move much until January and February 2021. The challenge for me personally is that all of my business comes from referrals or recommendations. The only business development I do is normally at events that I’m invited to, but of course there haven’t been any. Having endured the last six months and stuck to my guns, I expect to start calling clients in October or after furlough ends to say, ‘what a year’.

Training and development consultant: I’m at the stage where I’m looking at what I can do now with the business. Realistically, I won’t be able to return to training in schools until June next year due to the Government’s restrictions. So, in the meantime, I will be building out my list of contacts between now and Christmas, following up those leads and building networks for myself for when normality does resume.

In terms of my role at Mencap, I will continue to work the five-day week for as long as I can and then reduce when work picks back up again more heavily.

Stylist: Now that I have been able to work again, I have focused a bit more on online workshops on Zoom. These have made me more flexible and affordable, and I can now reach clients in places like Newcastle and Scotland where I haven’t been able to reach before. While I am conscious of a second wave of COVID-19, I have accepted some jobs this year, including Venice Film Festival and smaller TV projects.

We spoke to Amanda Digne-Malcolm, Director of Practice at ICAEW, herself a former self-employed chartered accountant, for her insights.

“As somebody who was previously self-employed, I can completely empathise with businesses in these current circumstances. Where there was certainty, now there is uncertainty. Economic conditions could now be really quite different for a long period of time.

“In terms of the places that CBILS hasn’t reached, for self-employed people, particularly in those creative sectors, it’s been widely publicised about the level of government support available. Regardless of the various schemes that are in place, it’s so important that businesses seek and get the best advice on what funding or support they can access and when. This will also help them manage their situation around cashflow, which is just so vital for businesses to not only survive but thrive.

“Conversely, despite these circumstances, there also comes opportunity. We’re actually seeing new businesses start up. Necessity is often the mother of invention, particularly in business, and one would infer that it’s the change in economic circumstances that is driving innovation, much like it did after the global financial crash in 2008. For all these businesses, the best way to navigate through these challenges is to seek the right advice at the right time.”

Are you self-employed and in need of financial advice and guidance? Visit our Invest in Advice page.

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