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After losing a company to COVID-19, owners seek the next gig

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NEW YORK: As airlines slashed flights and furloughs appeared inevitable in the early days of the COVID-19 pandemic, Mike Catania sensed there would be little need for a service that helped airline crews find short-term housing.

So, Catania and his fellow owners shut down Padloop in early March last year, even though the nearly year-old company had just broken even.

Catania started looking at how life was changing amid the pandemic and came up with the idea for his next business: Locaris, a website to help apartment renters connect with prospective neighbours to get the scoop on buildings and landlords. Because the pandemic limited people’s ability to meet in person, Locaris enabled renters to get the lowdown on a building safely.

“I tried to focus on, what is COVID a catalyst for? What trends is it bringing to market a couple of years ahead of schedule?” says Catania, who lives in Henderson, Nevada. Locaris launched in June and quickly found success.

As owners are forced to shut businesses, they’ve had to figure out what to do next. For entrepreneurs like Catania, the answer has been anticipating the next trend and creating a company to take advantage of it. Some owners have started businesses similar to those they lost, or companies that fill a different role in the same industry. Others have gone to work for someone else, while perhaps holding onto hopes of eventually reviving the businesses they shuttered.

It’s not known how many small businesses have failed in the pandemic, but different estimates all show devastation. Based on a projection last spring by the National Bureau of Economic Research, the number is likely well into the hundreds of thousands.

Data from the work-scheduling software company UKG shows that about one in six small businesses have closed their doors since the pandemic began. And the National Restaurant Association, a trade group, said 17 per cent of restaurants in the United States, or more than 110,000, had permanently shut by Dec 1; it’s likely that many were small or mid-sized businesses.

Alex Willen of San Diego was preparing to open a dog-boarding business when the pandemic hit; he was about to sign papers for a Small Business Administration loan to cover construction costs when his bank said it was putting new business loans on hold. Willen sensed the coronavirus outbreak wouldn’t end quickly, which meant dog owners wouldn’t be travelling and many would keep working at home, eliminating the need for his services.

By May, the loan money was available, but Willen decided to give up rather than open the business and not have revenue for months, maybe longer.

“It was looking like COVID was not going away by November or December, and those are huge months for dog boarding,” says Willen.

Virus Outbreak Small Business The Next Act

Alex Willen brings out treats for his dogs at his home in San Diego on Thursday, Feb 11, 2021. (Photo: AP/Gregory Bull)

Willen soon decided to restart a business he’d shelved in favour of boarding: Dog treats. Willen didn’t have to start at square one because he had already done some preliminary marketing and package design for the business.

Willen bakes for his two dogs, Cooper and Maple – which gave him the idea for Cooper’s Treats. He sells the treats on his website and Amazon.

“It’s looking like a real business,” he says.

READ: Fed sees ‘considerable’ risk of ongoing US business failures

READ: Could empty office buildings help solve France’s housing crisis?

Kathryn Valentine closed her consulting business last summer because she had lost her childcare options. Valentine’s nanny quit to take care of her own children, and daycare centres were closed. With a baby and a toddler, the Atlanta-based mother couldn’t work the nine-to-five schedule followed by the apparel companies that were her clients. She had to come up with another line of work – and quickly.

She already was an expert in training women in negotiating, a skill necessary for career success. Valentine had researched the subject in business school, so she founded Worthmore Negotiations and began lining up corporate clients.

“About once a week I’ll have a commitment during the day, but otherwise all my work gets done after 7pm,” she says. But Valentine hopes to revive her consulting business once the pandemic is over and she has childcare again. Her hope is to keep both businesses.

A series of lockdowns in Britain forced Steve West to close his acupuncture practice. With no money coming in, he returned to digital marketing, work that helped him get through a slowdown in his practice during the Great Recession. He’s not sure when, or if, he’ll return to acupuncture, given people’s uncertainty about close contact.

He’s also concerned that when life returns to normal, some clients will decide they’ve done just fine without acupuncture. Meanwhile, companies are in continual need of digital marketing, which helps them get more visibility in Internet searches.

“This is the time to focus on this (digital marketing), and maybe come back to acupuncture in the future,” says West, who lives in Haywards Heath, in the south of Britain.

Kriti Sachdeva has a new job with an agency that does e-commerce consulting. She had to shut her business that organised fairs and markets in Britain and other European countries; she had just five days’ notice that she had to cancel a fair in London last March, and five more events in the following months also were scrapped.

In April, Sachdeva realised she needed to get a job. “I knew this was going to take a long time and I knew I couldn’t do nothing,” she says.

She landed her position in June. She loves the work and sees herself doing it long-term, but also wonders about someday possibly organising fairs on the side.

“I think about it every day,” she says.

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As Congress scrutinizes gig worker rules, small-business owners need to know the basics – The Philadelphia Inquirer

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Uber’s UK ruling could have implications for gig economy startups

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Former Uber drivers Yaseen Aslam and James Farrar first brought their case against Uber in 2016
(Carl Court/Getty Images)

The UK’s Supreme Court has rejected Uber‘s appeal against an earlier ruling that said its drivers must be classified as workers, a result that may have a significant impact on other gig economy companies.

The decision—which cannot be appealed—means thousands of UK Uber drivers cannot qualify as being self-employed, entitling them to both minimum wage and holiday pay. The ridehailing company could now face paying substantial compensation to its drivers.

The ruling, which criticized Uber for sidestepping UK labor laws to withhold benefits, could influence other battles between gig workers and the companies that hire them. Earlier this month, the Independent Workers’ Union of Great Britain appealed against a court decision preventing riders for food delivery startup Deliveroo from engaging in collective bargaining due to their self-employed status. Deliveroo, which is backed by investors including Durable Capital Partners and Amazon, is looking to go public this year.

“Employees should benefit from improved rights; however, employers are likely to face increased costs of labor and disruption to their business models, which have proven to achieve rapid scale with gig workers,” said PitchBook analyst Nalin Patel. “The ruling may also now set a precedent in the UK and force other gig economy startups that utilize the self-employed contractor model to rethink how they operate in the region moving forward.”

Former Uber drivers James Farrar and Yaseen Aslam originally won their tribunal against Uber in 2016. Uber appealed the decision, but it was upheld in 2017, and again in 2018 by the High Court.

“This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery,” said Farrar, who is also a general secretary with the App Drivers and Couriers Union. “Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.”

In a statement, Uber’s regional general manager for Northern and Eastern Europe, Jamie Heywood,  said the court decision was focused on a “small number of drivers” who used the app in 2016. Since then, he said the company had made changes to its business,  providing free insurance in case of sickness or injury. He added: “We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”

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The future is now for gig-based entrepreneurship – San Gabriel Valley Tribune

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With Californian Kamala Harris as vice president, it’s clear the new Biden administration is taking its cues from the once-Golden State on labor policy.

In one of its first acts in office, the Biden Administration placed a regulatory freeze on a Department of Labor regulation enacted in the waning days of the prior administration relating to independent contractors.  The rule, according to labor and employment law firm Fisher Phillips, “aims to make it easier for businesses to classify workers as independent contractors.”

It’s unlikely this rule to give more workers freedom to be their own boss and set their own schedules will survive in a Biden administration that was heavily reliant upon labor unions for money and manpower to win the 2020 campaign.

Meanwhile, House Democrats recently re-introduced the controversial PRO Act in Congress, which “seeks to reduce the use of the independent contractor classification by companies such as Uber,” according to CNBC.

Both of these efforts followed the lead of California’s liberal legislative majority, which two years ago enacted the controversial Assembly Bill 5 to severely restrict the ability of Californians to work as independent contractors.  Their goal is to increase union membership and dues and force people to work in traditional, 9-to-5, union jobs that are relics of the past.

Doubling down on AB 5-type restrictions at the national level – which may be the Biden administration’s goal with the nomination of Julie Su, California’s chief AB 5 enforcer, as deputy Secretary of Labor – would be a tremendous mistake.  It would threaten innovation and hurt the ability of Americans who have lost their jobs to put food on the table during a global pandemic.

As documented in the new Pacific Research Institute study, “The Small Business Gig,” Americans are increasingly working in the gig economy.  They don’t want government – whether in Sacramento or Washington, DC – dictating how they can earn a living.

A 2018 Gallup survey found that 36 percent of U.S. workers have some sort of a gig worker arrangement.  Whether renting out an extra room to earn cash to pay the mortgage or using an app to earn a living on an alternate schedule, the gig economy is increasing opportunities for Americans to become entrepreneurs, while providing customers with lower cost services.

Many in California state government see the gig economy as exploitative and disruptive.  But data from the ADP Research Institute shows that 70 percent of gig workers are independent workers by choice.  Gig Economy Data Hub research found that more than two-thirds of gig economy workers are satisfied with their current work arrangement.

Government shouldn’t pick winners and losers in the economy.  New restrictions on the gig economy, like those proposed in Congress, will limit people’s freedom to become entrepreneurs while institutionalizing the old way of doing work.

Instead of adopting regulations at the federal level that 58 percent of Californians – Democrats, Republicans, and independents alike – rejected when they passed Proposition 22 in November, the Biden administration and Congress should take the opposite approach and enact market-based policies to encourage entrepreneurship and innovation.

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