The gig economy, also known as the free labor market system, is completely different from the traditional labor market structure which is based on a normal labor contract arrangement. It includes all freelancers, contract-based workers, project-based workers, and temporary workers. Currently, the concept of gig economy is still in its introductory stage which requires time and efforts to be adapted to business models.
As India has become a startup hub, many aspiring entrepreneurs are nowadays adopting the business model of gig economy. Though they face various challenges like web-based professional services, financial problems, the labor market, etc. Some well-known companies involved in the gig economy are Uber, Gigchain, Airbnb, Deliveroo, and others.
Speaking to Livemint, Giridhar LV, CEO of Nuvepro Technologies said it is crucial to acknowledge that while the gig economy offers unprecedented opportunities, it also presents unique obstacles that require strategic thinking and adaptability along with financial challenges.
However, Nuvepro has found that success lies in implementing a two-pronged approach — embracing technology to streamline operations and leveraging financial innovation to optimize cash flow, the CEO said.
“By harnessing digital platforms and adopting innovative financial tools, entrepreneurs can enhance their financial resilience and create sustainable business models. The gig economy thrives on the ingenuity and tenacity of entrepreneurs, and with the right financial strategies, we can unlock its true potential and build a thriving ecosystem that benefits both individuals and the broader economy,” Giridhar LV stated.
According to Shashank Sharma, co-founder and Director of Scoreme Solutions Pvt Ltd, entrepreneurs operating within the gig economy confront a diverse array of challenges which include effectively managing a dispersed workforce spanning multiple locations presenting intricate hurdles in coordinating and overseeing operations.
Sharma asserted that the absence of comprehensive regulations and legal protections in the gig economy can leave entrepreneurs vulnerable to legal risks and uncertainties which can lead to challenges in ensuring fair treatment of gig workers, impacting reputation, talent acquisition, and compliance efforts.
“One significant financial challenge faced by startups working in the gig economy business model is the evolving ecosystem of accepting and investing funds, particularly for cross-border transactions. Clear guidelines from regulatory bodies like the RBI are crucial to accommodate the specific needs of these one-person businesses,” Vivek Yadav, co-founder at Cosmofeed told Livemint.
In addition, Yadav suggested that gig economy entrepreneurs must focus on delivering high-quality products and constant innovation to overcome financial challenges and succeed in the business model.
Navneet Singh, founder and CEO of AVSAR stated that it is important for entrepreneurs to diversify their services and customers, as well as to become less reliant on a single source of income.
“Establishing clear pricing models and a well-defined budget can help to maximize financial resources. Additionally, having a well-established network and reputation can help to ensure a steady stream of referral and repeat client referrals, thus increasing stability. Utilizing technology and automation tools can also simplify operations and reduce costs. Online marketplaces and digital platforms can also expand their reach,” Singh recommended.
He further said that alternative financing options such as micro-loans and crowdfunding can also provide capital for expansion as well as essential resources.
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Updated: 22 Jun 2023, 12:53 PM IST