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Hipsters are the future of your business

Alex Hammond, Head of Marketing Communications at Kensington


I’ve seen the future, and it wears skinny jeans, thick rimmed glasses and rides a silly bike. Strange as it may seem, those crazy characters you see queuing outside the Apple store or clogging up the local artisanal coffee shop could prove to be the foundation on which you grow your business. Because the likelihood is that they work in the fast growing creative or technology industries.

Statistics from the TUC, tell us that the technology sector is the biggest employer in the creative economy, accounting for 2.55 million jobs, having generated 791,000 new positions in 2012 alone. Indeed over a quarter of the job growth in London comes from the technology and digital sector, according to the Tech City Investment Organisation, and the Government is continuing to invest in making Britain an attractive location for international technology firms.

Between 2009 and 2012 the number of technology companies incorporated in London grew by 76%, according to the Entrepreneur Index compiled by Barclay and the Business Growth Fund. And importantly, the Index points out that every region in the UK experienced an uplift, not just London and the South East. Indeed, Wales had the highest increase in high growth firms, followed by the Mildlands and the North West.

According to business magazine Forbes the number one occupation requiring a bachelor’s degree that has produced the most post-recession jobs is software development, while more than half of the top 15 occupations in this list form an integral part of the technology and creative sectors.

So why is this relevant to you?

The important take-out for mortgage intermediaries about these trends is not so much the sectors that are demonstrating growth, but the nature of employment within those sectors. I carried out a quick straw poll among a handful of successful marketing and digital agencies that I know, all of which are based within about a mile of each other, near Old Street roundabout just north of the City. Of these, the average split between permanent salaried staff and contracted freelancers was around 50/50, and this means that in these industries, half of all of the jobs that are being created are effectively for contractors.

I wanted to find out more about the dynamics that sit behind this changing employment model so I spoke to my brother, Andrew. He’s a freelance artist and, despite my continual teasing that he doesn’t have a proper job, makes a decent living working on contracts for a number of different clients. I was keen to find out, how many of his peers were doing the same and why he felt this was an increasingly popular model of employment.

“I have around 35 companies on my books and may work for around five of these in any given month”, says Andrew. “Freelance suits me because it means I can charge a higher daily rate and I also I get to choose the projects I want to work on, which gives me greater control of my career.”

But why does so much of this type of work rely on contracted freelancers, rather than salaried employees?

“Every job I work on is project based, to develop and deliver something new”, he continues. “And so when you deal with project work you need flexibility of resource to deal with peaks and troughs. Each project I work on definitely has a higher proportion of freelancers than salaried staff. I know of companies of only three or four people that work on really big projects where 75% of people working on the projects are contractors.”

So we have a sector emerging that is growing strongly, features occupations that are heavily in demand and where individuals are able to charge a premium day rate. However, because of the contractual nature of their income, these individuals could struggle to get the mortgage they deserve from the high street.

The evolving nature of employment sectors and tenures provides a massive opportunity for mortgage intermediaries. Identify the right lenders to properly assess the income of your contractor clients, and target those businesses and areas that have a high penetration of contracted freelancers and you could tap into a trend that will undoubtedly go on longer than a hipster’s beard.

Are you ready to offer the Hipster Mortgage?


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