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Nine Sources of Free and Low-Cost Labor For The Solo Entrepreneur or Micro-Business

C.S. Clarke, Ph.D.

A major hardship for the solo-entrepreneur is that the entrepreneur usually does all the work himself/herself. It's easy to get overwhelmed and everyone needs help occasionally. For most "solos" the expense of hiring help puts it out of reach. There are a few ways of keeping the expense in a range that may make getting help possible.

Here are the best methods I've seen used to get free and low-cost services for a private-sector business. The reason they are so few is that labor law, tax law and various government rules and regulations severely limit free and low cost work. It is good they do, because it's an area where abuse is far too easy.

One of the reasons I've written this article is because there are so many employers who are violating the laws. They don't mean to. There's very little guidance on this issue and quite a bit of misinformation. And it's easy to get in trouble. It's so important to check and make sure you're not risking lawsuits or fines that will cost you much more than the wages you save.

I'm not a lawyer and this isn't legal advice, but I've had more than one small business of my own and have worked for a number of others who've wrestled with these issues. And, whenever I've needed to use -- or help someone else to use -- one of these methods, I've checked with my local government, checked federal regulations and talked with legal advisors on how to stay within the law. The resources below are what I've developed from my own understanding of that advice and my research. You'll need to do your own research and talk with your own legal advisors.

1. Friends and family.

They constitute the most used method of "free labor." Just make sure that they don't meet the definition of "employee." They should not be working on a regular schedule or basis as an employee would, but simply give you a hand from time to time. You have no control over the service they "gift" to you. You're not their boss.

If your niece drops in for a visit, sees that you are overwhelmed with phone calls while trying to complete a writing project and takes over answering the phone for a couple of hours, that usually doesn't bother anyone. Or if you build a website for your brother's business as a favor. Or your best friend comes over on Saturday and helps you paint your office.

On the other hand, if Uncle Bert works twenty hours a week in the back office as your bookkeeper, he's probably an employee. (As I was saying earlier, you'll have to find local legal advice on that and how far the help can go and who can do it. Pay attention to child labor laws, too.)

The IRS has a "20 Factor Test" to determine if someone is an employee. It's meant to help you figure out if you're hiring an independent contractor or an employee, but it gives you a good outline of what's generally been determined to define "employee."

2. Self-Employed Volunteers.

Usually commercial enterprises are prohibited from using volunteer labor. However, people who are self-employed can volunteer to do specific projects for free. As long as it's offered as sampling or demonstrating, it's a part of their advertising and promotion.

However, be careful about this, because there may be incompetents or beginners willing to practice on you for experience. Also make sure that they are legitimately self-employed. Check that they have a business license or at least a reseller's license and make a note of the license number.

The best way to get this kind of help is to know the proposed helper or get a recommendation from a friend who knows the helper's work.

3. Pro-bono.

Professionals can waive their fees to help out small business owners who can't afford their services. They can also work at reduced fees. So, sometimes you can get consultants, accountants, attorneys, etc. at no cost or reduced rates. Often, as with self-employed "volunteers" mentioned above, the reason the professional will take such work is that he/she wants experience or publicity. That means you may be getting someone new and inexperienced who may make mistakes. But you may also just be getting high quality services from someone kind and generous. Also, don't forget that the Small Business Administration offers some free consulting services from retired business folks and executives to help you grow your enterprise. So, even the federal government approves of you getting some free help.

4. Barter.

Between you and an independent contractor. You can exchange services and products of all kinds and many folks are open to the process. If you are a writer, for example, you might create content in exchange for virtual assistant services.

There are tax issues involved in bartering, so you need to check with the IRS about reporting requirements. You might also want to seek legal counsel and get a clear barter contract so you can be comfortable in the knowledge that you are probably making a fair exchange.

5. Partnership (including joint-venture partnerships.)

A partner, even a limited joint-venture partner, isn't an employee no matter how much work he/she puts into the enterprise. There are a number of ways to have a partnership, but since this article is about getting help for solo entrepreneurs, I'm just talking about temporary or very limited partnerships.

6. Temps and Part-Timers from staffing agencies.

They may work as employees work, but you're not their employer, the contracting agency is. So you don't have to pay benefits, unemployment taxes, etc. It costs more in hourly wages than usual full-time, permanent employee wages, but you can use the people as you need them, send them back to the agency if you don't like them and ask them to return on a regular basis if you do like them. You can even use this method as a trial run for people you might eventually want to hire as regular employees.

(Usually, you'll have to pay a fee to the agency if you hire their temps as permanent employees, so consult your agency agreement before doing so.)

7. Piecework.

Piecework has long been used in trades like sewing and wood crafts, this approach can be used with a wide variety of products, including digital products. You can have people who work for a flat fee per "piece" produce components of your products and then incorporate those components into the finished work. Often this is faster and less costly than doing it yourself. (Just make sure the worker fits the legal definition of "independent contractor" or is employed by a firm you pay to provide the service.)

An example from sewing is: you cut and sew a sofa slipcover, but take the cushions to someone else to sew at home, saving you hours of time that you could use for cutting more slipcovers and making money faster.

As a digital products example, you might make e-books but have someone else produce the 3d covers for them. Graphics can be time consuming even for experienced pros, so if it costs you $30 for a simple cover, but saves you 8 hours of work, that's inexpensive labor!

8. Leveraged Outsourcing. (Includes VA's.)

Outsource to freelancers through gig sites like Elance and through micro job sites like Fiverr etc. The idea is you find out how much your outsource wants to do the job, then add your price to it and have it done for your customer/client by someone else, but make $ on it.

What services or products could you continue to offer while having someone else do some or all of the work for you?

Example 1. You can't outsource your own consulting, but you can offer your clients support materials that you have someone else write for you under your name.

Example 2. You can design a website for a client and offer him a web app for it that a micro-gig worker programmed for you as work-for-hire. You just add your profit to the cost of the programming and bill for it as if you'd made it yourself. Just don't offer the app as a work-for-hire project yourself -- sell it as a separate item that adds value to the site. And you can re-sell the app to other clients with similar websites.

9. Interns/Trainees.

Too many folks think that getting an unpaid intern or trainee is a great source of free labor. Not so. One of the rules of using interns or trainees is that you can't receive any direct, immediate benefits from their work. The main idea of their working for you is to train and benefit them.

You must have a clear intention of giving them work and supervision that actually trains them and develops their skills. They are not free labor, they are students who are learning skills from you. If you profit from their work, you have to pay them.

That said, if you combine training with minimum wage and treat them as employees, you can often get skilled, bright, enthusiastic workers for a small cost compared to what you'd pay for someone already trained. Check the Department of Labor rules for this as well as your local government.

This list may not be exhaustive, but it covers all the honest and legal ways I've seen to get free and low-cost help for the average solo-entrepreneur. If you're aware of any others (white-hat only), let me know.

(Disclaimer: Remember what I said at the beginning of the article. Nothing in this article is intended as legal advice. These are merely resources for you to explore. Check with your local government entities and legal advisors regarding issues involving free services, barter and/or work-for-hire.)





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Sep-25-2016



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