My sharing economy business helped me to buy my own flat

Author

Amelia Murray

October 9, 2015

Stella Baggott saved £40,000 in three years thanks to her sideline as a ceramics maker

Uber and Airbnb have attracted huge interest from those who enthuse about the “sharing economy” – new online ventures that tear up traditional ways of doing business by putting sellers and buyers in direct contact. But not everyone who fancies earning some extra money from the sharing economy wants to drive a taxi or let out their home to strangers.

Stella Baggott is among those to have found another way. Miss Baggott, 38, had worked full-time for 14 years as an illustrator in a publishing house. But earlier this year she went freelance, cut back her hours and now earns another salary from her hobby, making quirky ceramics.

She actually began selling ceramics three years ago, while she was still in full-time employment, by selling on Etsy, an online marketplace that specializes in handmade and vintage goods, although she now has her own ecommerce website.

The venture has proved lucrative. She puts around 25 pieces up for sale on the website every two weeks and sells them for £30-£120 each. Her ceramics often sell out within half an hour and customers tell her: “Your work is harder to get than a Glastonbury ticket”.

The income from her business enabled Miss Baggott to buy a flat in Brighton in July last year. Her Etsy sales helped her to save about £40,000 in three years, and she had assistance from her parents in the form of a £30,000 loan.

But she said money was tight in the months after she quit her job.

“I’d just bought the flat so there was no money in the pot,” she said. “Then, with changing over from full-time to freelance, I had to wait for invoices to be paid.”

This could take about two months, Miss Baggott said. “I became much more aware of what I was spending and for about four months I couldn’t pay my parents back and had to put off any big purchases.”

Now she pays her parents back £1,000 a month and has cleared £10,000 of the loan.

While she still worries about what would happen if people stopped buying her ceramics, or if her freelance commissions dried up, she said she wished she had pursued this flexible way of working sooner.

She also had to deal with the question of tax, which can be complicated if you have two sources of income.

She said: “Because I was going through PAYE as an employee, my earnings as a ‘sole trader’ from the ceramic sales attracted a high rate of tax – everything I was earning was halved. Now I’ve registered as a limited company, through which I channel both my freelance and ceramics earnings, and pay less tax.”

Miss Baggott said anyone thinking of following her example should take a good look at their financial position at the outset.

“I like to have a £10,000 buffer, which most people can’t believe,” she said. “But because I’m single I’ve got no one to rely on and it makes me more cautious – if I can’t pay my mortgage, I’ve got no partner to cover it.”

Professional advice is a good idea, she said.

“It’s true what they say about accountants – they’re worth their weight in gold.”

Freelancers also need to accept the trade-offs, such as the lack of employee benefits including sick pay, company pensions and life insurance. However, this could change as a result of a government review of self-employment, which is due early next year.

The change in freelance workers by sector since 2008
Sector % change
Art and literature 96
Design -14
Health 95
IT and telecommunications 71
Engineering -15

> IPSE

But Chris Bryce, head of the Association of Independent Professionals & the Self Employed (Ipse), said other recent changes could be putting people off working for themselves.

“Growth in self-employment over the past 10 years has been phenomenal, but it has slowed in recent months,” he said. “Recently announced change to tax legislation, such as the new dividend tax, and restrictions on tax relief for work travel are a concern and may be discouraging freelancing.”

But he added: “Aside from the significant contribution freelancers make to the economy, it opens up an avenue to work that wouldn’t otherwise be available to those people who, for whatever reason, aren’t able to work a typical nine-to-five day or need to work from home.”

If you are tempted to go it alone, “shared economy” services could prove lucrative. Research from Intuit QuickBooks, which provides accounting software, suggested that one in five people in Britain who offer such services earn more than £500 a week, with 3pc making more than £78,000 a year.

 

This article was written by Amelia Murray from The Daily Telegraph and was legally licensed through the NewsCred publisher network.


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