A new approach to help entrepreneurs launch and develop their - - PowerPoint PPT Presentation

A new approach to help entrepreneurs launch and develop their business, find partners and associates ... based on a new social and solidarity economic model, deployed via a dedicated platform and a support network

14/10/2019 FlexUp - supporting the solidarity economy 1

Buy – Sell – Participate

• Nearly 6 million1 unemployed / underemployed in France
• that is 20% of the active population → a real drama!
• young, suburbs, homeless, seniors, disabled, migrants ...
• A legal and tax framework unfavorable to recruitment
• a dissuasive labor law 2
• a penalizing taxation 3
• More and more precarious jobs
• the greater concentration and mobility of capital implies an

unfavorable balance of power for employees

• this puts pressure on wages and favors the use of temporary

worker, temporary contracts, part-time work, offshoring ...

• A structurally discriminating economic model
• the priority of a payments depends on the nature of its

recipient: employee, state, supplier, banker, shareholder

• the shareholders take the most risks, so they are the sole
• wners of the company and of all the profits
• employees take (virtually) no risk, so they have no voting

rights, no rights to a share of the profits

• Platforms capture a growing share of value
• the network effect favors the web giants’ platforms (Amazon,

Uber, Airbnb, Google) to the detriment of others

• these giants capture 20% to 50% of revenues (commissions,

advertising, management fees) and impose their conditions

• fierce competition between sellers / service providers

FlexUp: an innovative solution to many structural economic and social problems of our societies

Analysis The FlexUp approach

• Entrepreneurship as a response to underemployment
• if companies do not recruit, or not enough, let’s help people

start and grow their own businesses

• help people take control and become masters of their destiny
• An innovative, flexible and fair business model
• all participants without distinction (employees, suppliers,

investors ...) can share the risks of a project

• the profits are shared in proportion to the contribution and

level of risk taken by each participant

• An open platform, at the service of its participants
• a marketplace where entrepreneurs can offer all types of

products and services and find clients

• management tools for structuring the business, managing

contracts and accounting, calculating the distribution of profits with ease and transparency

• A support network to help entrepreneurs
• a network of sponsors (advisers, investors, experts ...) to

support entrepreneurs throughout their journey

• a simple, flexible and incentive-based compensation scheme

for sponsors 4

14/10/2019 FlexUp - supporting the solidarity economy 2

FlexUp: an open marketplace at the service of its participants

Clients Entrepreneurs Sponsors

Type of participant:

• Find products and services online

What makes FlexUp special:

• A single platform for all types of products

and services

• A simple and efficient system for

searching and ordering

• Fair, transparent and guaranteed prices
• Visibility and contact with entrepreneurs

(profiles, evaluations, favourites, statistics)

• A guarantee of service, quality and safety
• Home delivery, withdrawal in shop or

remote service – as the case may be

• Focus on local entrepreneurs
• A helping hand for entrepreneurs who

are just starting

• Participating in the social and solidarity

economy

• Offer products and services online
• Find customers easily
• Payment simplicity and security

What makes FlexUp special:

• For all types of entrepreneurs, all types
• f products and services
• A fair and healthy competition model,

ensuring reasonable prices for clients and reasonable revenues for suppliers

• Lower commissions (or none for certain

categories)

• An integrated management tool
• Receive support from competent and

caring people

• Help on administrative procedures
• Financing support at the start-up stage

and throughout the development

• Sharing the profits of the platform
• A flexible scheme that accompanies

entrepreneurs and start-ups throughout their development

• Help entrepreneurs get started and grow

their business

• Make yourself useful by valuing your

time, your skills, your resources 9 What makes FlexUp special:

• Helping with a potential return 10
• Flexibility on your type of support

(coaching, investment, specialized advice) and your level of commitment (from a few hours to several million €), and on the level of risk taken

• Participate in an entrepreneurial project

and a dynamic local community

• Create "clubs" of sponsors (mutualized

investments pools)

• Twinning with local "clubs" of

entrepreneurs (e.g. solidarity between urban and rural areas, Europe-Africa, ...)

• Participating in the social and solidarity

economy Key benefits:

14/10/2019 FlexUp - supporting the solidarity economy 3

FlexUp: an innovative, flexible and fair business model

4 14/10/2019 FlexUp - supporting the solidarity economy

The objectives of FlexUp are to:

• simplify

the creation, structuring and management

• f

businesses,

• help businesses create more wealth and ensure that this

wealth is better shared among all participants. For this purpose, the FlexUp business model aims to:

• simplify and eliminate distinctions between different types of:
• participants: employees, investors, suppliers, customers ...
• contributions: labor, capital, goods, services ...
• payments: remuneration (wages, sales, purchases, interest,

dividends ...) or capital (debt, equity, grants...).

• encourage better collaboration between all participants by:
• aligning the interests by unifying the funding and

remuneration systems,

• better spreading the risks,
• ensuring greater transparency.
• make businesses more resilient and easier to finance:
• make the cost structure more flexible,
• reduce the need for capital to finance creation and growth.

Objectives

• 1. To begin, each participant (including investors) negotiates with

the company:

• a target remuneration in return for its respective contribution

(e.g. 15% return on invested capital),

• the split of this target (= flexible + base) between:
• the base (without risk): paid every month,
• the flexible (at risk): paid at the end of the year, within the

limit of the available cash flow, if there is any.

• 2. Incoming cash flows (revenues + funding) are used to pay:
• first the base costs, to all participants,
• then the flexible costs, in proportion to the available cash flow
• 3. If the cash remaining after payment of the base is insufficient to

pay all the flexible costs in full, then:

• the flexible of each participant is paid at the same rate (ex: if

there is 3 M € of cash and 4 M € of flexible to pay, each one gets 75% of its flexible),

• the unpaid flexible residue is converted into capital.
• 4. The net cash flow remaining after payment of the flexible is

distributed among all the participants in proportion to the respective risks.

• 5. The risk of each participant is calculated according to5:
• his capital: investment + unpaid flexible residue,
• his flexible remuneration.

The FlexUp approach

• Alphonse (25) is a young man without qualifications. He lives in

a small town in Burkina Faso and had no income for 2 years

• Fabrizio sponsored him to open a café, with an investment of

300 €:

• 120 € rent (3 months paid in advance x 40 €/month)
• 140 € equipment (tables, chairs, thermos, cups ...)
• 40 € provisions (nescafé, tea, water, pastis)
• Alphonse’s goal of is to earn 75 € / month: 100% flexible salary

(at risk, depending on the café’s revenues)

• Forecast:

Question: How to distribute the net surplus fairly? FlexUp approach: Based on the respective risks taken

FlexUp case study Nr 1

Café Alphonse: FlexUp for helping an entrepreneur open a café

Context

• The Café’s revenues serve:
• first to pay the base costs: rent, purchase of provisions,
• then pay the flexible costs: Alphonse's salary,
• finally, to distribute the available net cash flow6 in proportion

to the risks taken by each

• Cash flow allocation scheme:

The FlexUp approach

14/10/2019 FlexUp - supporting the solidarity economy 5

Alphonse Fabrizio Total Capital €

• 300

300 Flexible € 900

• 900

Risk € 900 300 1 200 % 75% 25% 100% Net cash flow € 225 75 300 % 75% 25% 100% Total remuneration € 1 125 75 1 200

(flexible + surplus)

% 94% 6% 100% €/month €yr Revenues 150 1 800 Base costs 50 600 Base cash flow 100 1 200 Flexible salary 75 900 Net cash flow 25 300

Note : in this simple example, we assume that capital and flexible have the same risks (i.e. 1 € capital or 1 € flexible = 1 € of risk). These risk weight factors can be adjusted.

• Bèla (55 years) had a construction company in Romania. His

business went bankrupt a few years ago and he came to France to find work. He lived 9 months in the street, before being helped out by NGO’s. At present he is getting the basic state allowance (RSA 550 €/month) and obtained a social housing (rent: 290 €/month). His specialty is glazing.

• Fabrizio wants to sponsor him with an investment of 2 000 €

(for equipment) + renting out his cellar (50 €/month)

• Bèla's target income is 2 000 €/month7 (100% flexible)
• Forecast:

Question: How to distribute the net surplus fairly? FlexUp approach: Based on the respective risks taken

Context

• Cash flow allocation scheme:

The FlexUp approach

14/10/2019 FlexUp - supporting the solidarity economy 6

FlexUp case study Nr 2

Bèla Glaziery: FlexUp for helping a craftsman launch his activity

Year 1 Year 2 €/yr

%

€/yr

%

Revenues 28 000 36 000 Base costs

• 7 000
• 9 000

Base cash flow 21 000 27 000 Flexible salary paid

• 20 488

85%

• 24 000

100%

Flexible rent paid

• 512

85%

• 600

100%

Net cash flow

• 2 400

Unpaid salary residue 3 512 Unpaid rent residue 88 Residue converted to capital 3 600

15%

• Year 1

Bèla Fabrizio Total Capital €

• 2 000

2 000 Flexible € 24 000 600 24 600 Risk € 24 000 2 600 26 600

% 90% 10% 100%

Flexible paid € 20 488 512 21 000

% 98% 2% 100%

Residue (unpaid flexible) € 3 512 88 3 600

Year 2

Bèla Fabrizio Total Capital € 3 512 2 088 5 600 Flexible € 24 000 600 24 600 Risk € 27 512 2 688 30 200

% 91% 9% 100%

Net cash flow € 2 186 214 2 400

% 91% 9% 100%

Total remuneration € 26 186 814 27 000

% 97% 3% 100% Note : in this simple example, we assume that capital and flexible have the same risks (i.e. 1 € capital or 1 € flexible = 1 € of risk). These risk weight factors can be adjusted.

• Three partners want to open a pizzeria in these conditions:
• The manager will have a target salary of 3 000 €/month8, of

which 1 500 €/m base paid on a monthly basis + 1 500 €/m flexible paid at the end of the year depending on results,

• The landlord will provide the premises for a target rent of

2 000 €/month (1 000 €/m base + 1 000 €/m flexible)

• The investor will finance 20 000 € for the renovation work, for

a target flexible return of 10% (i.e. 2 000 €/year).

• In this simple case, we equate the risk with the total exposure

(capital + flexible), without risk weighting factor:

• flexible: risk taken on remuneration,
• capital: risk taken on the investment + on the unpaid

flexible residue accumulated in previous years

Context Projections

14/10/2019 FlexUp - supporting the solidarity economy 7

FlexUp case study Nr 3

Pizza Oro: FlexUp as a simple and flexible association model

k€ Year 0 Year 1 Year 2 1 - Revenues 120.0 160.0 Manager

• 18.0
• 18.0

Landlord

• 12.0
• 12.0

Other costs

• 70.0
• 80.0

Total base costs

• 100.0
• 110.0

2 – Base cash flow 20.0 50.0 Total flexible costs 32.0 32.0 % flexible payment ratio 63% 100% Flexible paid

• 20.0
• 32.0

Flexible residue (converted to capital)

• 12.0
• 3 – Net cash flow (to be distributed)
• 18.0

Manager

• 6.8

6.8 Landlord

• 4.5

4.5 Other costs 20.0 20.8 20.8 Total capital (end of year) 20.0 32.0 32.0 Manager 18.0 24.8 24.8

39%

Landlord 12.0 16.5 16.5

26%

Other costs 22.0 22.8 22.8

36%

Total risk (capital + flexible) 52.0 64.0 64.0 100% % risk payment ratio

• 28%

Manager

• 7.0

39%

Landlord

• 4.6

26%

Other costs

• 6.4

36%

4 – Distributed cash flow

• 18.0 100%

Remuneration, k€/yr Base Flexible Target Manager 18 18 36 Landlord 12 12 24 Investor (20 k€)

• 2

2 Total 30 32 62

Interested? Join us and participate in the FlexUp project !

• Platform development
• developing the online marketplace and management tool
• releasing of a beta version end of 2019
• Legal structuring
• identification and comparative analysis of legal, accounting, tax,

social, and other schemes for:

• the platform: association, solidarity-based company of social

utility ...

• the entrepreneurs: micro-entrepreneur, liberal profession, sole

proprietorship, company creation ...

• Developing the community
• invite entrepreneurs, customers and sponsors to register on the

platform, to offer and search for products and services

• to partner with other actors of the social and solidarity economy
• Promotion and communication
• creating communication content in various forms
• promotion and dissemination on different media
• events: conferences, speed-dating entrepreneurs / sponsors ...

Next steps How can I participate ?

• User
• register on the platform as beta tester
• indicate any products or services that you can offer – either to

consumers, to other entrepreneurs or to the FlexUp platform !

• help us improve the platform and its features
• Ambassador
• promote FlexUp around you
• recruit new users / participants
• identify and contact potential partners
• Expert / Advisor
• help us develop and improve the financial, legal, accounting and tax

aspects of the FlexUp model

• offer your services to the entrepreneurs of the platform
• Communication
• help us design and create communication materials, and

disseminate them on different media

• Investor / Patron
• finance the development of the platform via the FlexUp model, for

a social and solidarity investment

14/10/2019 FlexUp - supporting the solidarity economy 8

In FlexUp there is no distinction between employee, investor, supplier or customer: all participants contribute to the project and are free to choose their level of commitment and risk

Appendices

9 14/10/2019 FlexUp - supporting the solidarity economy

FlexUp: comparison with some existing solutions

10 14/10/2019 FlexUp - supporting the solidarity economy

Site Strong points (which FlexUp should imitate) Weak points (where FlexUp needs to be different) Uber

• Driver selected by the platform
• Prices set by the platform
• Very ergonomic app
• Very high commissions (24%)
• Uber imposes its prices, with downward pressure
• Result: impoverishment of drivers, unfair competition for taxis

Tilipack, izi-by-edf.fr

• Wide service offer (building works)
• Visibility on the price: fixed price, guaranteed, and

flexible depending on the service requested

• Craftsman selected by the platform
• High commission (20%)
• No visibility on the craftsman (profile, evaluations)
• Low visibility / low traffic (Tilipack # 216 574 in France)
• Tributary of advertising to attract traffic
• No details of price (goods + labor)
• Tax / legal aspects not clear, not optimized

Lulu dans ma rue

• Home and personal services
• Predefined hourly rate
• Does not manage payments
• Limited to small / unskilled jobs
• Commission still considered too high (15%)

Leboncoin, Pagesjaunes

• Wide offer of products and services
• Good visibility traffic (# 6 in France, 150 M visit /

month)

• Competent professionals (locksmiths, plumbers ...)
• No offer of services, but rather a directory of providers
• Lack of transparency on prices and services
• Manual and inefficient search and negotiation process
• Risk of falling on incompetent / dishonest people
• Work often undeclared, unsecured
• Prices are often very high
• A large part of the revenues of the craftsman are absorbed by advertising

(up to 50% for locksmiths)

• 1. Source INSEE: 2.6 M unemployed + 1.5 M wishing to work but not

registered for unemployment + 1.4 M part-time wishing to work more = 5.5 M, or 19% of the active population (which is 29 million).

• 2. restrictions and constraints for dismissals and restructurings, litigation

risk (prudential) and social conflicts (strikes), legal obligations (works councils, employee representatives, protected employees ...), mandatory costs

• 3. Analysis of the tax burden (employee contributions + employer

contributions + income tax) according to the wage levels:

• 4. Coaching, financing, practical and administrative aspects ... To help

them regularize and declare their income according to the legal framework most suited to the type of profile / project: auto- entrepreneur, service check service, creation of a sarl, ...

• 5. In the simplest scheme, the risk is equal to the total exposure (capital +

annual flexible remuneration), without weighting. For a finer analysis, a specific risk factor is assigned to each amount that the company is likely to pay, taking into account: the level of seniority (basic, flexible ...), time (1 month, 1 year ...), expected return (0%, 5%, 10% ...), seniority of this return, associated voting rights, options (repayment, conversion), elasticity of nominal value (fixed, upward / downward revaluation), ...

• 6. In this simple case, one can equate the net surplus with the profit. But

in reality, the FlexUp approach is a "100% cash" approach, which does not take account of accounting considerations (provisions, depreciation, etc.). FlexUp accounting is therefore analytical accounting (with its own terminology), which is kept in parallel with general and tax accounting.

• 7. Total cost charged for the company, excluding VAT, regardless of the

nature of the contract: employee, auto entrepreneur, payroll ...

• 8. Same
• 9. Anyone can value their skills or resources to help a budding

entrepreneur: legal, IT, accounting, material support by providing a garage, lawn mower, equipment, or simply by investing money . 10.The FlexUp model for sponsors is a hybrid between volunteering, donating, lending and investing. When you invest time, resources or money to help a contractor, you do it in a flexible business model: you will be paid based on the entrepreneur’s revenues, and you can have - in addition - a share of benefits, depending on your contribution and the risk taken.

Notes

14/10/2019 FlexUp - supporting the solidarity economy 11

€/mois Gross Salary Net income after tax Total employer cost % contributions + taxes* % population below Minimum wage 1 522 1 183 1 654 +40% 8% Median wage 2 300 1 686 3 068 +82% 50% Staff 3 000 2 168 4 076 +88% 71% Manager 5 000 3 291 7 085 +115% 91% Director 10 000 5 975 14 319 +140% 98%

* as % of net income after tax