Freelancer co-operatives: how a financial hit became the best marketing money could buy

I am in Walthamstow for the launch of the latest outlet for the fast-growing freelancer co-operative, IndyCube, working with the support of the union Community.

3tyHPNW6The initiative has been brokered by the local Labour & Co-operative MP, Stella Creasy, who explains that “nearly 15% of residents in Walthamstow are now self employed, with many facing insecurity in their incomes as well as losing considerable time and money trying to stay afloat.”

With wonderful symbolism, the setting is a former Co-operative Bank on Hoe Street. Through the Hive programme, the Co-operative Bank as part of its ongoing Ethical Policy, has been directly supportive of a new generation of co-operatives, such as freelancer co-ops. We are likely to see local events or support from the Hive perhaps now delivered via this setting in East London.

The rise of freelancer co-operatives is being seen here in the UK – and we have a welcome new guide to the field due out this Autumn in partnership with the TUC and Co-operative College – but also in other countries.

In South Korea, after the Framework Act on Cooperatives took effect in December 2012, a swathe of new freelancer co-operatives have been formed. During the first 30 months after the FAC took effect, Koreans founded 7,132 cooperatives, of which more than 74 percent are small entrepreneur cooperatives, including cooperatives established by self-employed individuals with employees, self-employed individuals without employees, and freelancers.

Started as a mutual of artists, the emergence of SMART in a range of countries across Europe to serve freelancers is one of the poster children for an emerging new model.

Alex Bird, co-author of Not Alone, a landmark report for Co-operatives UK that helped to inspire IndyCube today, tells the story of SMART as a case study and there is one chapter which I found inspiring when I first heard about it. This was how the co-operative’s biggest single financial loss turned into its biggest marketing success.

Since 2001, SMART has guaranteed payment for all work invoiced through the system, underwritten by mutual funds built up within the organisation. So members are paid within seven days, and don’t have to worry about defaulters. This is not unusual in a wider business setting, in the form of factoring, but an inspired offer for freelancers. People who work as self-employed are extraordinarily varied (different tribes as the Royal Society of Arts puts it), but as Philip Ross, freelancer and Associate of Co-operatives UK, says, “one thing that unites everyone who is self-employed is that we all want to get paid.”

As part of their growth in Belgium and France, SMART recruited hundreds of “Take Eat Easy” cycle couriers. SMART were involved in negotiations with the company, and helped secure an agreement for their members to pay the couriers per shift, rather than per delivery.

In July 2016, disaster. “Take Eat Easy” went into bankruptcy – partly as a result of competition from Deliveroo.

Living up to its guarantee, SMART paid out to its members. The business lost the huge sum for it of €340,000. But it turned out to be the best recruitment tool that it had ever experienced. The members told everyone about the co-operative and how it had stood by them. Nothing else on the market matched this offer from SMART and freelancers flocked to join, for the assurance membership offered and having had the proof point of the collapse of “Take Eat Easy” that the co-operative was on their side.

Despite the shock and crisis, this was a good news story for SMART. It was a financial shock, but one that it was able to weather, having built adequate reserves in a guarantee fund over time. Every penny spent on the guarantee for cycle couriers who lost out was recouped in new membership fees over the period that followed.

Losing money turned out to be the biggest boost this enterprise could have.

Small is beautiful, but it is not secure. Small becomes powerful when it comes together.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s