Potential legal pitfalls in my simple business model: thoughts please

11 posts in this topic

Corona has had a huge impact - and this will continue to be the case for a long time to come.

 

With so many people in so many sectors out of pocket, I looked at the question of how I could provide clients with better value for money, without stiffing those who are actually doing the work: I want to try and be ethical.

 

My model is simple enough but this is Germany and nothing is ever simple here:

 

A potential client has a budget of X for product A. I have a pool of (legally registered) freelancers and I tell them a job has come up and that the client is offering to pay X

 

The pool are under no obligation to to take the job. They only do so when the amount offered and the job specifics work for them.

 

If a budget is seriously below what may reasonably be considered the going rate, then a member of the pool could say "Ok, I can do this job in the time frame specified, but X is too low. Call it Z and I'll supply the service/product".

 

When both parties agree on basic conditions, I take a set fee* - an admin charge from the client. This amount is deducted from the overall price - so even though the client is paying up front, the fee is in reality being paid by the freelancer. The fine detail, including, the remaining payment details is carried out between freelancer and client: I will have done my bit.

 

(*In theory, the freelancer could pay this fee, but I hate the idea of asking people to pay to work, even though it makes no difference in terms of their take-home at the end of the day)

 

So that is it. I'm not actually offering a physical product - I am connecting clients with those who are.

 

A concern is this: if the person actually doing the job is paid in cash and tries to get away without declaring it, am I in any way liable? (remembering that the only money I will have received is my admin fee. I'm not taking the full amount off the client, having it sit in my account to collect interest for a month... I'm not doing any payroll stuff. I'll have knowledge of the agreed price between client and freelancer - but that is it. This should, hopefully be fairly hands-off - as far as I am concerned - transaction)

 

If, after paying the admin fee, and through no fault of my own, the job somehow falls through, am I liable for any claims from either the client or freelancer - or would having a box to tick with "I have read the terms and conditions" be sufficient?

 

Any other thoughts or comments are much appreciated. 

 

Taff 

0

Share this post


Link to post
Share on other sites
19 minutes ago, Malt-Teaser said:

Sounds like MyHammer.

 

Hi Malt-Teaser,

I've never had to call in a contractor for work in the house and so was no aware of this site. It certainly looks like the sort of set-up I'm looking at.

 

Thanks for the tip.

 

Taff :-)

1

Share this post


Link to post
Share on other sites
1 hour ago, catjones said:

How do freelancers find work now without you?

Well, in my sector, many typically work through bigger firms. Some will get nearly all their work from one firm - which is dodgy. Having another option - like my proposal - potentially helps to mitigate against accusations of Scheinselbständigkeit since the work carried out is for diverse customers, not me.  When I first moved here, a lot of colleagues were taken on as self-employed but got "cosy" in the routine of just working for one firm. The firms knew that this was detrimental to the freelancers but for the firm, this was a way of getting cheap labour.

 

Further, such firms often take a very healthy cut. I mention being ethical in my post - the amount I propose to charge is miniscule in comparison. The freelancer is under no obligation to take a job if they consider it not to be worth their while. They also have a chance to up-sell themselves: A client might want X, might only now about X. The freelancer can say ok, I'll provide X for so much. But have you considered Z? I can offer you X and Z for the great price of Y.

 

I am trying to create something where the client, the freelancer doing the work - and myself - wins.

 

 

1

Share this post


Link to post
Share on other sites

 

43 minutes ago, Taffthedigger said:

I am trying to create something where the client, the freelancer doing the work - and myself - wins.

 

Unless you already have all the necessary contacts and more offers than you can fill, I doubt your venture will be profitable. You don't seem to already possess the legal knowledge to write all the contracts that you'll need and I can't see how you can cover your legal and marketing costs along with earning something for your time while only charging your freelancers a small commission. 

0

Share this post


Link to post
Share on other sites
3 hours ago, engelchen said:

 

 

Unless you already have all the necessary contacts and more offers than you can fill, I doubt your venture will be profitable. You don't seem to already possess the legal knowledge to write all the contracts that you'll need and I can't see how you can cover your legal and marketing costs along with earning something for your time while only charging your freelancers a small commission. 

 Thank you engelchen.

I have enough contacts - freelancers - to kick off with and something I did not mention in my initial post - it seemed irrelevant to main pitch - is that freelancers, no matter how skilled, will have blank days in their schedule, have a client cancel at the last minute. This system potentially works well for those who would rather earn something on that day than nothing.  Few things start off on a large scale do they? It is generally a case of trial and error.  

 

As for covering costs, well I do have other work - this is another pie to have a finger in. As for being profitable - I reckon it only needs to be reasonably so to make it worth my while. This is not a get rich quick scheme.  Legal knowledge - well there you have me... but then if I thought I had that, I would not have bothered asking on here for opinions. I don't claim to have it. Believe me, I'd love to find a business mentor to discuss this with

0

Share this post


Link to post
Share on other sites

Freelancers are not the difficult side of the marketplace to attract. Those are easy because as you said, they need more work to do.  The difficulty comes in finding the businesses to post there, and what you will offer them beyond the many many competitors in this space. Why would people go to you instead?

 

There are many competitors from general ones to ones for specific tasks, trades, skill sets etc.  I think before you go any further you need to do a real competitor analysis (given you weren’t aware of MyHammer which is a typical example of this business model for tradesmen, there are many others for designers, consultants, other professionals etc) and work out where you would fit and what your value proposition is.

1

Share this post


Link to post
Share on other sites
39 minutes ago, evildudette said:

Freelancers are not the difficult side of the marketplace to attract. Those are easy because as you said, they need more work to do.  The difficulty comes in finding the businesses to post there, and what you will offer them beyond the many many competitors in this space. Why would people go to you instead?

 

There are many competitors from general ones to ones for specific tasks, trades, skill sets etc.  I think before you go any further you need to do a real competitor analysis (given you weren’t aware of MyHammer which is a typical example of this business model for tradesmen, there are many others for designers, consultants, other professionals etc) and work out where you would fit and what your value proposition is.

 

" Why would people go to you instead? " Well, in the sector I'm looking at, this model is not used. I've looked at this from different angles and I cannot see why this is the case. The local market is dominated by a few big names who are happy doing what they have always done - and the same is true at national and international level. 

39 minutes ago, evildudette said:

 

0

Share this post


Link to post
Share on other sites

Hi, congratulations! I think is a nice idea, for sure (of course I am not an expert), you won't have any problem since there are similar models already like that.

I remember using a translation platform and a graphic design one following the exact same principle, both based in Germany so it is 100% doable.
Of course there will be negative people saying "no" all over the way, just ignore them :)

Good luck!

 

0

Share this post


Link to post
Share on other sites

My company does not accept freelancers any more, they are a big liability. We only accept externals now. Meaning that their salary is paid by the external company. 

This is becoming the norm for many companies trying to avoid the hassle and legal danger of hiring freelancers directly.

3

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now