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How the founder of Freelancer Club built an award-winning startup using only freelancers

Posted by Crunch on Mar 5th, 2020 | News and opinion

How the founder of Freelancer Club built an award-winning startup using only freelancers | Crunch, image of Matt Dowling

Matt Dowling founded the Freelancer Club in 2014 after his own experiences as a freelance photographer highlighted a need for a change. Nearly six years later, Freelancer Club has become a unique space for businesses and freelancers to connect and collaborate.

Freelancer Club has gone through many changes over the past few years – most notably its transition from a traditional office-based startup to a completely fluid freelance workforce.

We caught up with Matt to discover how and why he chose to work exclusively with a team of freelancers, what the future of team building looks like, and for his opinion on the potential impact IR35 could have on the world of flexible work.

So, tell us about the early stages of the Freelancer Club.
The core mission has remained the same – support freelancers and help them grow. My business partner and I started the Freelancer Club as we were both freelancers ourselves for a number of years and felt that there wasn’t much support out there. We made a list of all the things that would have helped us when we were freelancing, wrote on them on a whiteboard, and set out to provide them to our community on a single platform.

Why do you think the company has been so successful?
Today you can find plenty of freelance job sites that help freelancers find work but very few provide genuine support. I’m not just referring to business resources but emotional support too. An engaged community requires a sense of belonging and I think freelancers are drawn to that part of us.

We didn’t want to be a faceless platform that hid behind its brand so I chose to share my freelance story [as a freelancer, Matt lost £11,000 from an unpaid invoice which had a very negative impact on his personal and professional life]. We always felt that community thrives when you get to know the people behind the profiles. In addition to finding our members paid work, we host events, run wellbeing meetups, chat with our members every day online and do a lot of work with students at universities. It’s a club with traditional values using cutting-edge technology.

How has freelancing changed since you launched?
When we started, the word ‘freelance’ had some negative connotations. In some circles, it was thought of as someone who couldn’t get full-time employment. Now it’s what a lot of people aspire to become. The fact that we were one of the first to embrace freelance culture helped us become a leading brand in the industry.

We went from a few hundred members to forty thousand members in less than four years without much marketing at all. So many members in our community were connecting via the site to collaborate and seeing the benefit of the Freelancer Club that they talked about us to others. We’re very proud that word of mouth has been our main ‘marketing’ strategy.

Was it hard getting the business off the ground?
Well, we are a bootstrap company, meaning we never sought investment. We’re completely self-funded which gave us autonomy but also meant we had a cash flow challenge at the beginning. We needed to build the community quickly as losing momentum would have risked seeing the business fizzle out.

It was also challenging just figuring out how best to serve our members. We’ve never steered away from our mission statement, but figuring out what our members found valuable was harder than we thought. We realised after the first year that trying to second guess what our community wanted was pointless, so we turned to our community. Since then, our members tell us what they want and we drive that change.

Your company structure is fairly unique and apt! You only use freelancers to run the business. When and why did you make that decision?
When we first set up the company we had a small team of full-timers. However, after a year or two of building that team, we realised that we didn’t have the volume of work to justify their roles.

A lot of the time we asked them to chip in and do other bits and pieces that they weren’t necessarily suited to. Although that’s all part and parcel of a small startup, we were paying top dollar for remedial work half the time. Changing the structure enabled us to grow steadily, lower the risk, and practice what we preach.

What impact did this have on the business?
When we had the full-time team, it became untenable after a while as the wage bill was draining the bank account. I’ve always used freelancers in all my businesses, and it was no coincidence that I turned to what I know best in our hour of need. It was obvious that we could get a lot more done with less wastage if we spread our wage bill around and tailored to the needs of the business based on the demand.

We decided to hire freelancers for various projects that we knew were suitable to a freelance framework, whether that’s a few hours a week or project by project. We took that risk knowing freelancers have other clients and it’s not the same guarantee that you get when you have full-time staff in terms of brand loyalty and the hours that they can give you. We also had so much experience managing freelancers that we felt we could limit staff turnover and retain the passion our full-time team had for the brand.

What do you love about working with a freelance workforce?
There’s a lot to love. I’ve found managing freelancers to be more like a collaboration or a partnership rather than a hierarchical setup. In that regard, it was easier.

I’ve also found that freelancers will bring new ideas in areas I know nothing about. As we like to adapt to the demands of our community, we can source new freelance talent to deliver in a short space of time.

We’ve also been able to grow the company safely and steadily for the past few years. The business is showing continuous growth year on year since we made the transition. It also means that I have the flexibility and freedom myself to be able to live a different type of life as a startup founder. We’re keen to build communities in other cities and this structure gives me the flexibility to explore those opportunities.

Any tricky parts?
Sure. Not having everyone sitting around a table or in the same office has its challenges. We’ve found that remote freelancing works well for some roles but not for others. Anything that requires immediate and continued input from me or another member of the team is better suited in person. Screen-sharing (via video conference calls) is great and getting better but still doesn’t quite replace the nuances of sitting next to someone in the flesh.

There’s a higher turnover when it comes to freelancers too. When we started, we were spending a lot of time recruiting and training freelancers on the role and the company. Over time, it got easier and setting up an internal hiring strategy was a massive time-saver.

Would this structure work for any type of business do you think?
Not necessarily, no. I think a lot of it depends on the business’ finances to begin with, how quickly they want to grow, and the nature of the work. If you receive investment and have the ability to outlay a chunk of that money on personnel then a full-time staff structure makes more sense. Investors want a return so there is often pressure to deliver results fast.

Freelancers will always be a valuable asset to any business as there are a multitude of side projects that need to be done but at the core will most likely be a full-time team. In saying that, the definition of full-time employment is being challenged year on year as workers demand a better work-life balance so we might end up with a version somewhere between the two structures. We would always recommend first-time founders to engage with a range of freelancers to test the water and get a sense of how various roles work. I got my fingers burned when I set up my first company many years ago. I hired full-time staff without really understanding how to manage them. A freelance specialist in that scenario would have required far less management and would have taught me a lot about the role at the same time.

For other businesses, a hybrid structure may be suitable. A core full-time team in place for the day to day operations, and then a wider freelance network for projects that pop up.

Do you think IR35 will have an impact?
It’s already having an impact. Larger companies (IR35 doesn’t affect companies with a turnover of less than 10.2 million) are putting systems in place to protect themselves against any potential investigation. Some will err on the side of caution and introduce a blanket system that classifies all ‘freelance’ hires as employees.

The knock-on effect of this is that the top freelancers will turn down work if they are to be taxed as an employee and work with companies who have a more nuanced system in place. I suspect we’ll see a panic to begin then things will settle down over time. The government is under a lot of pressure to review IR35 and their proposed launch of April 2020 seems optimistic, particularly if you consider their updates to the CEST tool (the online tool that helps determine if an individual is ‘caught’ in IR35 or not) only rolls out in March.

In the future will you continue to grow the business using freelancers?
For us, we’re probably going to look at a hybrid structure as we’re growing to such an extent now that we need full-time staff to cover one or two areas. We will very much continue to engage with freelancers for projects and we love putting our money where our mouth is when it comes to outsourcing. Freelancing is the future, it’s the conduit for a cultural trajectory and not even IR35 will stop that!

We’d like to thank Matt and our partners at Freelancer Club for taking some time out to talk about how they grew their business and the possible challenges of the new IR35 legislation.

If you’d like to hire freelancers for your projects, the Freelancer Club lets you post a role for free or use their new Concierge Service that combines cutting-edge technology and human insight to source top freelance talent for your business without the costs. Find out more at the Freelancer Club. Best of all – we’ve got a special offer for Crunch clients or Crunch Chorus members of 20% off the first payment on any Freelancer Club membership package (including six-month membership), use code: CRUNCH20.

If you’re a Crunch client concerned about these upcoming IR35 changes, get in touch with us to learn more about the preparations Crunch have made to help you navigate the new legislation.

If you’re not a Crunch client, organise a callback with one of our expert advisors and discover how we can help you grow your business. We can answer your IR35 questions, help you build your perfect accountancy package, and take the stress out of managing your accounts.

Don’t forget you can also join our self-employed community, Crunch Chorus, where you can download an array of free tools, spreadsheets, and business guides. You can also join our Crunch Chorus Facebook group, and share your experiences with thousands of self-employed people just like you. The best part? Crunch Chorus membership is completely free, and it always will be.

 

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