How New Tech Can Help SMBs Weather the Recession
By: Johnny Reinsch
Tags: Startup, Sharing Economy, Fintech, Recession, Freelancers

Two-thirds of business economists say the next recession is near — and may be here as soon as 2020. The first to feel the impact will be freelancers, small and medium businesses.

That’s a problem, given that freelancing is the fastest growing segment of the workforce and SMBs account for $5 trillion of our economy.

This Time’s Different

But, there are new ways to ease the blow. The difference between the looming recession and the 2008 financial crisis is the advantages we get with technological developments like AI, data analysis capabilities, and blockchain. Using these strategically can reduce the economic impact of a slowed market for freelancers and SMBs, particularly now that these technologies have hit the mainstream.

One of the biggest changes to the way freelancers and SMBs find work is the emergence of online marketplaces.

Online Marketplaces

Platforms like Upwork (it was around in 1999 under the name of “Elance” but had a fraction of the jobs available on it today) make it easier for freelancers to find clients and vice versa., which will be useful during a recession, when there will be fewer full-time jobs available, and labor diverted to “gig workers.” While losing clients in 2008 would have put pressure on freelancers to heavily lean into their networks, local businesses or the (limited, often low-paying) online marketplace that is Craigslist, they can now turn to the established, high-volume gig economy marketplaces that have mushroomed in recent years.

It also means the ability to pivot easily and find work in other fields, should a freelancer’s skills be in low demand compared to others.

Unlike Upwork, which focuses on online-based jobs ranging from programming to writing, TaskRabbit (founded in 2016) uses the power of online networking to facilitate home maintenance services. Contractors, handymen, and tradespeople could turn to it in a downturn when either they themselves no longer have full-time employment or they cannot offer full-time employment to their employees.

Setter is another example of a startup that may come to the aid of the home maintenance industry. Currently available only in Toronto and San Francisco — but with plans to expand everywhere in North America — the startup manages home maintenance needs through a simple app. Vendors are pre-vetted and, as opposed to other marketplaces, offered ongoing work once contracted.

SketchDeck is an online design marketplace but it does more than connect designers with clients. It leverages AI and machine learning to assign the best designer for the job and estimate completion time. Thus, it protects both clients and designers by allowing the former to approve iterations — ensuring satisfaction — and guaranteeing payment for the latter.

Peer-to-Peer Payment Services

Peer-to-peer payment services are also changing the way freelancers and SMBs are getting remunerated. While in the past they were forced to rely on PayPal and/or traditional banking services that charge considerable fees, they can now handle payments through services like Venmo and the Cash App instantly and, depending on the kind of payment, at no cost.

Fintech

Then there’s Qwil. On the business side, we allow organizations to easily onboard and send out payments globally with fees that are highly competitive compared to those of the traditional banking system. But for SMBs and freelancers, we offer the option of getting paid as soon as work is invoiced, as opposed to waiting the 30, 60 or even 90 days that it might take a large organization to process payments. Not to mention that the lack of recourse means that even if an organization goes bankrupt and is unable to pay Qwil back, freelancers still get to keep what they’ve had advanced.

From connecting freelancers and SMBs with clients to facilitating payments and removing pesky fees, there’s no doubt that the next recession will be different from the one in 2008. To what extent, only time will tell.